The Perfect Trust (For You)

Revocable living trusts, irrevocable trusts, charitable remainder trusts, charitable lead trusts, special needs trusts, education trusts, testamentary trusts, trusts with tax provisions and trusts without. Trusts come in all shapes and sizes and can do most anything you want them to. The key is to determine exactly what you need a trust for and to have a knowledgeable and experienced estate planning attorney draft the perfect trust for you.

What is a trust?

A trust agreement is a legal document that specifies how you wish for your property to be held — and eventually distributed — to your heirs.  The person who sets up the trust (the “trustor”), indicates who will have control of the assets in the trust (the “trustee”) and who will benefit from those assets (the “beneficiaries”).

If the trust is revocable, i.e., can be changed, you will begin by serving as trustor, trustee and beneficiary of the trust assets.  If you become incapacitated, the trusteeship will change to the person you have designated as your successor.  When you eventually pass away, those you have designated in your trust as the beneficiaries will receive what you left for them.

Reasons for setting up a trust

You may wish to set up a trust to:

• Avoid conservatorship proceedings.  A properly drafted revocable living trust, along with a Power of Attorney, will designate someone to handle your finances if you are incapacitated — court intervention will not be required.
• Avoid probate. Probate is a court process whereby your creditors and taxes are paid and the rest of your assets distributed to your beneficiaries. A properly drafted and executed revocable living trust does the same thing outside the court process.
• Reduce or eliminate estate taxes. Individuals and couples with very large estates (i.e., in the millions) can have their attorney insert tax provisions in their revocable living trust designed to minimize or eliminate estate taxes — an irrevocable living trust may also be used to take money out of your estate and/or make sure that life insurance proceeds are not considered part of your estate for estate tax purposes.
• Protect assets for children.  A revocable living trust, or a testamentary trust in your will, can specify terms for distributions to your children that your trustee must follow, such as providing them with money only for education and living expenses until they are 21, 50 percent of the trust principal at age 25, the balance at age 30. In addition, a special needs trust can assure that funds designated for special needs children do not disqualify them from receiving government benefits.
• Make a will contest more difficult.  Contesting the terms of a trust that has been in operation for many years is far more difficult (and expensive) than contesting the terms of a will that has recently been admitted to probate.

Are there any disadvantages to setting up a trust?

If none of the benefits listed above concern you, or if you have a very small estate, it may not be worth your while to spend additional funds on a trust when a will is sufficient.  You should, however, first consult with a Tampa estate planning attorney to see what they recommend.