Used correctly trusts are powerful tools that help you protect and preserve your assets. Whereas a will is a legal document that provides instructions on what to do with your assets after your death, a trust is a legal entity that holds those assets. When you create a trust you are called the “grantor” because when you fund a trust you are granting ownership of those assets to the trust. The trust is administered by a trustee on the behalf of a beneficiary.
Any assets that have been granted to the Trust technically no longer belong to you but the Trust. Therefore when you pass away those assets bypass the probate process.
Most trusts are setup for the sole purpose of avoiding the probate process, and are sometimes used instead of a will. However, Florida trusts can be used to manage and distribute assets during life as well.
Trusts are more complicated to setup. And, due to management fees associated with many types of trusts; they are also more expensive as well. However, Trusts allow for more flexibility. Assets distributed through a Will are done all at once. One time distributions are not always desirable. So for instance, although you may want to provide for the financial wellbeing of a minor child, family member, or even a friend, but they don’t have the financial acuity to manage a large financial distribution over a long period of time.
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Wills and Trusts have very similar purposes. They both help you, the benefactor; manage the distribution of wealth to beneficiaries. However, they accomplish their purposes in very different ways. A well-constructed estate plan can leverage those differences for maximum asset protection and control of how and when those assets are distributed.
Everyone should have a will. It’s the only way for you to communicate what you would like done with the assets you’ve worked so hard to build. Depending on your situation setting up a trust, or several different trusts for specific purposes, may also be strategically important, or in some cases necessary. Wills and trusts are the foundation stones of good estate planning.