VanNess & VanNess, P.A.

How trusts can be a useful part of an estate plan

Florida residents who are creating an estate plan may assume that trusts are only useful for people who have substantial assets. However, there are a number of different types of trusts that can protect people and assets in many different ways. One of the simplest types of trusts is known as a Totten trust. This is used for assets such as bank accounts but not for real property such as a home. Creating a Totten trust may be no more complicated than filling out a beneficiary designation form.

However, most trusts are more complex. An asset protection trust can help protect assets from creditors, but since it is a type of trust that is not allowed in Florida, it would need to be set up in another state. This could still be a risky move because the asset could be vulnerable to a court challenge by the creditor. A more certain type of protection is the bypass trust. This trust helps reduce taxes for married couples by passing some assets tax-free to the surviving spouse.

While these are some of the main types of trusts, there are many other kinds. For example, a charitable trust donates to charity while a spendthrift trust manages money for irresponsible relatives, and a special needs trusts can help a disabled loved one continue to receive government benefits.

A person may want to discuss estate planning and how trusts may be useful with an attorney. The attorney may be able to warn against common errors with trusts. For example, some people create a trust but then fail to fund it. It is also important to choose the right trustee. This needs to be a responsible person who has the financial acumen to manage the trust and who is also able to deal with any conflict with the beneficiary.

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