Even though it is important for virtually everyone in Florida to have an estate plan, many people still think that they do not have enough wealth to warrant creating one. This is especially true when it comes to trusts. The less-than-accurate negative association of young adults living off inherited wealth makes some want to avoid the topic of trusts altogether. In reality, a trust can be a very useful estate planning tool.
Understanding what a trust is may help some people feel more open to the idea of creating one. A grantor is the person who creates the trust, which is considered its own legal entity. The grantor transfers property into the trust in order to benefit at least one beneficiary. The trust is managed according to a trust document, which is a set of rules created by the grantor. These rules can address things like under what conditions and when benefits can be paid out, and are carried out by a trustee who manages the trust.
A person does not have to be extremely wealthy to take advantage of various trust benefits. Take special needs trusts, for example, which parents can use to provide ongoing financial support to children with disabilities. When applying for Medicaid benefits, transferring assets into a trust can protect property and prevent a person from exhausting his or her life’s savings before qualifying. Asset protection trusts are also helpful for protecting assets from creditors.
The grantor can select whomever he or she wants as the trustee, and also controls what property is transferred into the trust. Which trust or trusts a grantor chooses to use can provide personal benefits for him or herself as well as other beneficiaries. Since Florida residents do not have to be wealthy to create trusts, a person who is thinking about estate planning should consider how he or she could benefit from creating a trust.