Not All Trusts Are Equal: 4 Different Types of Florida Trusts
In broad terms, a trust is a legal arrangement where a grantor transfers certain property to a trustee, who then holds and administers that property for the benefit of a beneficiary. Florida law recognizes many different types of trusts. Each trust has its own unique characteristics, benefits, and potential drawbacks.
Here are four of the more common types of Florida trusts that we see in our practice:
- Revocable Living Trusts
When most people create a trust as part of their estate plan, it is usually a revocable living trust. In most cases, the grantor is also the trustee and beneficiary of the trust during their lifetime. Upon the grantor’s death, a successor trustee takes over and distributes the trust property according to the grantor’s instructions.
Revocable living trusts offer great flexibility, as they can be amended or revoked by the grantor at any point during their lifetime. That said, a revocable living trust does not shield any assets against potential creditor claims against the grantor. Nor does it offer any particular tax benefits.
- Testamentary Trusts
A testamentary trust is one created under a testator’s last will and testament. The trust is actually part of the will, so it can be amended or revoked by the testator at any point before their death. Testamentary trusts are commonly used to distribute property to a beneficiary under specific conditions. For example, a testator might include a clause in their will leaving a large inheritance to a trustee to hold on behalf of a minor beneficiary until they reach adulthood.
- Land Trusts
Land trusts are a type of revocable trust specifically designed to purchase, sell, own, or finance real estate in Florida. Land trusts can reduce tax obligations associated with land transfers. They can also protect the beneficial owners’ privacy, as well as their ability to claim a homestead exemption on their primary residence.
- Irrevocable Trusts
An irrevocable trust is one that the grantor cannot amend, change, or revoke after it is made. Effective control of the trust’s assets passes to the trustee. Irrevocable trusts are often used to minimize tax obligations. For wealthy individuals, assets placed in an irrevocable trust are not considered part of the grantor’s taxable estate for federal estate tax purposes. At the other end of the spectrum, lower income individuals with special needs can place assets in an irrevocable trust to help them maintain their eligibility for Medicaid and other means-tested public benefit programs.
Contact a Pompano Beach Estate and Trust Litigation Attorney Today
A properly drafted and executed trust can offer a number of critical estate planning benefits. Unfortunately, legal disputes often arise in Florida over challenges to the validity of a trust and its administration by the trustee. If you are in such a situation, it is best to consult with a qualified Pompano Beach validity of trust lawyer who can review your case and advise you of your options. Contact the offices of Mark R. Manceri, P.A., today to schedule a consultation.
