Home » Blog » What do I Need to Know About Florida Trust?

What do I Need to Know About Florida Trust?

what-do-i-need-to-know-about-florida-trust

 

Did you know a trust established during the lifetime of the person creating the trust is a living trust? In contrast, a trust created at death in a last will and testament is a testamentary trust. A settlor or grantor is a person creating the trust. When a living trust i established, a trustee must be appointed to manage and later distribute the trust assets to the beneficiaries. The beneficiaries are the persons who ultimately receive the assets from the trust. This event normally occurs upon the death of the settlor or grantor. The living trust instructs the trustee how to manage the assets and when to distribute the assets to the beneficiaries named in the trust. The person creating the trust can also be a beneficiary of the trust during his or her lifetime.

The person creating the trust (the settlor or grantor) may serve as the trustee of the trust. In such event, a successor trustee is named in the trust to manage and distribute the trust assets if the settlor or grantor is subsequently incapable of serving as trustee as a result of his or her disability or death.

Only assets conveyed to the trust can be administered by the trustee who owns the legal title to the trust assets for the benefit of the beneficiaries. The person creating the trust must convey real property to the trust by a properly executed deed. Likewise, personal property must be transferred to the trustee by a properly executed bill of sale. Bank accounts, stock certificates, certificates of deposits, and other intangible assets must be retitled in the name of the trustee.

Assets not conveyed or transferred to the trustee are subject to probate. A pour-over will is used to distribute to the trustee assets not owned by the trustee when the settlor or grantor dies. These assets are then administered and distributed to the beneficiaries named in the trust.

A trust establishing during the lifetime of the grantor settlor is either revocable or irrevocable. A revocable trust permits the grantor or settlor to revoke the trust, alter the terms of the trust, or withdraw some of all of the assets from the trust. A revocable trust becomes irrevocable upon the death of the grantor or settlor.

Since the grantor or settlor of a living trust retains control of assets through his or her power to revoke or alter the trust, there are no gift, income, and estate tax consequences when assets are conveyed to a revocable trust. The grantor or settlor continues to report the earnings of the trust assets on his or her personal income tax return if the grantor or settlor is the trustee.

The constitution of the state of Florida and the Florida statutes grant a homestead exemption to every person who has legal or equitable title to real estate and maintains a permanent residence on that property for himself or herself and family. If this residence is placed in a revocable trust, the owner may still claim the household tax exemption as long as he or she is the sole beneficiary of the trust during his or her lifetime. The owner must also be permanently residing on the real property owned by the trust. In the trust, the grantor must be granted the sole right to the full use, occupancy, and possession of this homestead. Also, the revocable trust must not grant the trustee any power, authority, or duty with respect to the homestead until the person creating the trust directs otherwise or revokes the trust agreement, or the beneficiary dies.

The living trust is an excellent instrument by which a person can plan for the administration of assets in the event of a disability. Do not wait to learn more about trusts from our law firm. You can contact us to schedule a meeting with attorney Gregory Gay.