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Here are the most common types of trusts we use in our practice:
The cornerstone of most estate plans I create, revocable living trusts offer tremendous flexibility while avoiding probate. These trusts (either individual or joint) can be modified during your lifetime, allowing you to maintain complete control of your assets.
A revocable trust keeps your estate details private and provides seamless asset management if you become incapacitated. You can change beneficiaries, add or remove assets, or even terminate the trust entirely as your circumstances change.
I often tell clients, “Once you’re really drafting a lot of extra language into your will, you might as well be doing a trust.” The additional protection and control are well worth the slightly higher upfront cost.
Special needs trusts are extremely helpful if any of your beneficiaries have disabilities. They allow you to provide financial support without jeopardizing essential government benefits like Medicaid or SSI.
Assets in a special needs trust supplement rather than replace these critical benefits. The trust can pay for therapies, equipment, education, and quality-of-life enhancements not covered by government programs.
One crucial point I emphasize: you cannot accomplish this level of protection through simple beneficiary designations or transfer-on-death arrangements. Leaving assets in such a manner will result in your disabled beneficiary being disqualified from needs-based benefits.
Though less common, these trusts offer a strategic tax advantage for married couples with appreciated assets. Florida isn’t a community property state, but our laws allow these trusts to secure a full step-up in basis for assets when one spouse dies.
We’ve seen this save clients thousands in capital gains taxes on appreciated real estate and stock portfolios. For couples with highly appreciated property, this trust creates a tax planning opportunity that’s otherwise unavailable in Florida.
Also called “Five-Year Trusts,” these irrevocable structures help shield assets from Medicaid spend-down requirements for long-term care. Assets transferred at least five years before applying for Medicaid may be excluded from eligibility calculations.
Many of my clients hesitate to use these trusts because they require surrendering control of the trust assets, but the closer you get to the five year mark, the more protection you gain.
Qualified terminable interest property trusts (QTIP trusts) are a type of marital trust that provides income or controlled access to a surviving spouse while ensuring remaining assets ultimately pass to children from a previous marriage.
These trusts prevent unintentional disinheritance or misuse of funds, creating security for both current and future generations. They typically function as a subtrust that activates after the first spouse passes away.
For clients concerned about potential family conflicts, these trusts provide peace of mind that everyone will be treated according to their wishes.
When evaluating which trust structures might work best for your situation, consider:
Each factor guides you toward trust structures that align with your specific needs and goals.
Creating a trust but failing to transfer assets into it ranks among the most common and costly mistakes. Florida residents often overlook this step with real estate, financial accounts, and business interests.
To properly fund your trust:
An unfunded trust becomes merely an empty vessel that cannot accomplish your planning goals.
The person or institution you select as trustee will have significant responsibility for managing and distributing your assets according to your wishes. Common trustee selection mistakes include:
Ask yourself whether a family member, trusted friend, professional trustee, or combination of these (co-trustees) will best serve your beneficiaries’ interests.
Life changes such as marriages, divorces, births, deaths, and significant changes in financial circumstances may necessitate updates to your trust. Florida residents should review their trusts:
A trust that sits unreviewed for years may fail to reflect your current wishes or take advantage of changes in the law.
Florida residents enjoy several unique advantages when establishing trusts:
These Florida-specific benefits make trusts particularly effective estate planning tools for residents of the Sunshine State.
Creating the right trust structure isn’t something to postpone. Proper planning ensures your assets remain protected and your loved ones provided for according to your wishes.
Your first step? Schedule a consultation with an experienced Florida estate planning attorney who can:
Take action now to gain peace of mind knowing your estate plan protects what matters most to you.
As a Florida estate planning attorney, I understand the nuances of Florida trust law and can help you navigate these important decisions. Contact us today to schedule your initial consultation and take the first step toward securing your legacy.