Understanding Trusts and How can it Help You?
A Trust is a legal arrangement, under which a Grantor or Settlor allows designated Trustees to hold legal title to property for the benefit of third persons, i.e. beneficiaries.
A Trust is used as an estate planning tool to either supplement a will or to be use in place of a will. Trusts are useful for managing property during life, or controlling the distribution of property after death.
Generally, for a Trust to be valid in Florida, the Grantor/Settlor must have intent to create the trust, with a valid purpose, and deliver legal title of the trust assets to the Trustee to be held for the benefit of certain beneficiaries. The Trust will be said to have a valid purpose so long as the purpose does not contravene or offend public policy. The Trust assets must be certain and identifiable in order for the trust to be valid. Certain types of trusts will have additional requirements.
THE GRANTOR or SETTLOR
Depending on local tradition, the creator of the trust is known as the Grantor or Settlor. This is the person who originally owns the assets before creation of the trust.
Generally, the Trustee is the person who is chosen by the Grantor/Settlor to hold legal title to the trust assets and manage the assets for the benefit of the beneficiaries.
The Trustee will have the burdens of property ownership, meaning the Trustee must manage the property, keep the property in repair, make investment decisions related to the property, pay taxes, etc.
The Trustee is subject to fiduciary standards, meaning the Trustee is obligated to manage said property for the benefit of the beneficiaries, and cannot “self-deal.” Self-dealing is grounds to have a Trustee removed from their fiduciary position.
As the name implies, Beneficiaries are the specific individuals who are said to hold equitable title of the assets in the trust, and as an extension are be entitled.
WHY CREATE A TRUST?
There are many reasons to create a trust including avoiding probate, managing property in life, and further controlling exactly how and when certain inheritances are distributed.
Many people prefer to use a trust as the center of their estate plan in order to minimize the fees and effort required by their loved ones when a probate is required to be opened to distribute assets under a Will or under Florida’s Intestacy statutes.
If you are reading this post because you having issues relating to any of the above, contact our office at 305.224.8900 for a free consultation and let one of our attorneys review the matter at hand in order to protect your rights.
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