What Is A Trust And How Does It Work?

Many people believe that trusts are only for wealthy individuals, but this is not the case. In fact, most people should consider a trust as a method of distributing their assets.

Summerfield Law Office offers a variety of options for your estate planning needs. One such tool is the creation of a trust, which may be quite different from the impression many people have from the media and other sources. A trust is just one tool that can be used in effective estate planning, and effective estate planning is one of the most important things you can do to protect your loved ones and your assets.  

What Is A Trust?

A “trust” is essentially a legal agreement between two parties for the benefit of a third.

The “grantor” is the person that creates the trust.

The “trustee” is the person or entity in charge of the trust.

The “beneficiary” is the person or persons who benefit from the trust.

Trusts can be used to safeguard assets until a beneficiary reaches a certain age, to distribute part of your estate to your favorite charity, to solidify the distribution of your assets without public involvement, and for many other purposes. One of the most common types of trusts is a revocable trust, named as such because it can be modified or revoked during the grantor’s lifetime as long as the grantor retains the legal capacity to modify or revoke it.

Key Differences Between A Trust And A Will

In many ways, a trust is similar to a will. However, there are a few important differences.

The biggest difference between a trust and a will is that many trusts are not subject to probate upon the grantor’s death, as a will would be.

This helps keep your finances and assets private in the event of your death. Once a will goes to probate, court records are open to the public and so are your finances that appear in those records. Since a trust is not subject to probate, administering your assets through a trust can also reduce legal fees and related court costs that may otherwise eat into your estate and take away from what is ultimately distributed to your beneficiaries.

A trust may also help avoid some taxes in certain circumstances, which will allow you to pass on more to your loved ones. If you own a business, this can be especially useful in passing on the business to someone while possibly avoiding some of the burden of heavy estate taxes.

Additionally, a trust can be activated upon disability or serious illness to make sure that you are well cared for and that your loved one’s’ needs are met without undue financial hardship.

How Do I Set Up A Trust?

While much of this information may seem very straightforward, there are actually many types of trusts that could fit your needs. Each of them comes with their own legal requirements and consequences. If you want to learn more information about trusts or if you want to determine if a trust is right for you, contact Mindy Budzynski at Summerfield Law Office to explore these topics and other estate planning tools with an experienced Estate Planning Attorney in Tampa, Riverview, and surrounding areas in Florida.