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Trusts

Trust Attorney
Cantonment ➔ Pensacola ➔ Navarre

ESTATE PLANNING - TRUSTS

Trusts ➔ Types of Trusts ➔ Problems Solved w/Trusts


An estate plan utilizing a trust can also help you lay out how you want your beneficiaries to receive their inheritance. Without a trust, a minor child will receive 100% of their inheritance as soon as they turn 18 years old. While some kids are wise and responsible beyond their years, this could also lead to a “distracted” freshman year of college… and a broke sophomore year. By using a trust, you can ensure that a child’s needs are taken care of (medical and educational, but also clothing, travel, and even expenses like a car) while still protecting the money from the child--and vice versa!

A trust is basically a legal entity (like a corporation or LLC) where one person (a trustee) holds assets for the benefit of another person, the beneficiary. It’s a “box” that holds money or property for somebody else. Like a box, there is a lot of different stuff that you can put into it and, like some boxes, there are instructions on the outside telling you what to do with the contents.

A trust can be drafted for the trustee to reward certain behaviors (education) while discouraging others (drug use, gambling, wastefulness). A well-drafted trust can also protect a young beneficiary’s inheritance in a blended family from an ex-spouse or a surviving spouse who is unrelated to the child.

There are many forms of trusts. Each serving specific needs. Click on the type of trust services you are looking for below. If it is not in the list, drop us an email with a request and we will be more than happy to provide you with any information you need.

What Is a Revocable Trust?

You may be wondering if it's time to get your will in order. While many people think of making a will to move their assets into a loved one's name, wills are only one aspect of estate planning and have some potential disadvantages.

A will must to go through a judicial process called probate, where the court supervises the payment of your debts and distribution of your assets. However, by using a non-probate alternative like a revocable trust, the grantor becomes the sole overseer of their estate and its distribution. When you choose a revocable trust, you're also opting for privacy as probates become public information that is accessible to anyone.

What Is a Revocable Trust?

While a will is important for most people, a revocable trust, also known as a revocable living trust, is, supplements your will and not only provides immediate benefits for the grantor but can be changed over time as the grantor deems fit.

That means, unlike an irrevocable trust, the grantor remains in control of their real estate and other valuables for as long as they're alive. Grantors may redistribute, sell, or add assets and change or dismiss beneficiaries, or even revoke the trust in its entirety.

Benefits of a Revocable Trust

Lack of Court Involvement

Not only is a revocable trust a non-probate alternative to a will, but it also takes effect immediately after the Grantor signs it, ensuring the court stays away from your case. Even if the Grantor is mentally or physically incapacitated, the trustee immediately receives full authority on all assets in their name. They do not need to go to court to determine financial control.

Easier on Your Trustees

After passing, you want your loved ones to receive the assets entrusted to them, from real estate to life insurance. What's more, you may want these assets to be available instantly so they can help your family pay for funeral costs, estate taxes, and other debts. Both irrevocable and revocable trusts allow successors to receive assets effortlessly.

How Does a Revocable Trust Differ from an Irrevocable Trust?

The primary appeal of a revocable trust is that it grants the Grantor complete access to all their assets throughout their lifetime. However, an irrevocable trust forces the Grantor to surrender that control by permanently locking in all assets and beneficiaries upon creating the trust. Unless all parties agree to change an irrevocable trust, there's no room for alterations as the years progress.

Still, many opt for an irrevocable trust since it comes with more benefits for the Grantor. For instance, irrevocable trusts benefit from tax reductions and creditor protection, unlike revocable trusts.

What Are Some Drawbacks of Revocable Trusts?

Lack of Tax Deductions and Benefits

Since an irrevocable trust requires the grantor to relinquish their ability to manage their assets, it means the grantor no longer owns them. Therefore, the grantor doesn't need to pay taxes on their assets or worry about creditors or debt collectors.

However, assets in a revocable trust remain part of the estate and are subject to fees for tax purposes. What's more, you won't receive tax benefits from charitable donations and other possible deductions.

Creditor Protection

Unlike a revocable trust, an irrevocable trust also avoids creditors. If you're in a position where lawsuits are highly possible, such as for doctors, lawyers, or property developers, creditors cannot take your trust. A revocable trust does not guard your assets in the same way.

It's crucial to understand your options before deciding between the types of trusts available to you. To learn more about or begin planning your irrevocable or revocable trust today, call Boyles & Boyles Attorneys at Law at 850-433-9225 today.

Should I Set Up an Irrevocable Trust?

Trusts are important legal instruments that can simplify the transfer and administration of your assets. An irrevocable trust can be helpful in situations where you cannot control your assets yourself, due to death or incapacity, or if owning the assets yourself has undesirable financial or legal consequences.

An irrevocable trust can contain:

  • cash
  • houses and other types of real estate
  • vehicles and other property
  • life insurance policies
  • investments
  • and other assets

When setting up a trust, one of the first questions to ask is what type of trust you want - revocable trust or irrevocable trust? Naturally, the key difference is that transferring assets into an irrevocable trust is permanent unless the beneficiaries permit you to amend the trust. In contrast, you can rescind or change a revocable trust at any time.

The Purpose of an Irrevocable Trust

Putting assets in an irrevocable trust gives ownership of the assets to the trust rather than you. There are many circumstances where ownership of assets exposes you to legal or financial consequences. If you face any of the following situations, consider setting up an irrevocable trust.

Loss of Benefits Due to Means Testing for Government Assistance

Since you do not own the assets, they do not count against you if you apply for government programs that have means tests. Many people who receive Supplemental Security Income (SSI) would lose these benefits if they were to inherit property or gain income. Often, SSI recipients have to choose between rapidly spending down the assets that they receive or losing their benefits.

Assets in revocable trusts count toward means testing, but not all the assets in an irrevocable trust count as resources. Only the part that the trust pays to you counts. This allows you to have money or assets in trust and only receive a small regular payment for living expenses.

Special needs trusts, including self-settled trusts, pooled trusts, and third-party trusts, may not count toward SSI means-testing.

Bankruptcy

An irrevocable trust can also protect your assets if creditors try to seize them as payment for debts. Because you are no longer the legal owner of the assets, the creditors have no legal claim to them.

Conflict of Interest

Investments and financial transactions could produce a conflict of interest or expose you to the perception of impropriety. Blind trusts can separate you from your assets, allowing you to profit from them without assuming responsibility for administering them.

Estate Planning

One popular reason for placing assets in an irrevocable trust is to transfer those assets to someone else in the event of your death. The trust owns those assets, so the law does not view them as part of your estate or subject to many of the legal complications that arise during the distribution of your estate, including some tax benefits when the trust sells your assets.

An irrevocable life insurance trust fund is one way to ensure that a reliable trustee transfers life insurance policy payouts to beneficiaries in the event of your death.

For large estates, placing assets in an irrevocable trust can reduce or eliminate the amount of estate tax that your estate would have to pay before they can go to your designated beneficiaries. The federal estate tax exemption affects only a small number of households, but it can be valuable in certain situations.

An irrevocable trust provides an additional level of commitment that can reassure beneficiaries. Family dynamics can often change, and with an irrevocable trust, the beneficiary does not have to trust the grantor not to rescind the trust fund due to a family dispute.

The Process of Setting Up an Irrevocable Trust

When you set up an irrevocable trust, the first thing to do is decide what type of trust you need and what it is for. Define a beneficiary or beneficiaries for the trust and decide how and when the trustee should distribute those assets.

You will need to pick a trustee to administer the irrevocable trust. The trustee should be someone that will administer the trust fund faithfully and act in the best interest of the beneficiaries.

The trust should have a tax identification number that allows the trust to pay taxes on income separate from your personal tax return.

Once you have signed the irrevocable trust document, you would then fund the irrevocable trust by transferring your assets into the fund. Transferred assets then become the trust's legal property.

Hiring An Experienced Florida Estate Planning Firm

The precise wording of an irrevocable trust can impact its validity and have financial consequences that last for years or decades. A reputable law firm can help you evaluate the benefits of your revocable and irrevocable trust options. For a consultation about irrevocable trusts and estate planning in Florida, call Boyles & Boyles at 850-433-9225.

Setting Up an Out-of-State Property Trust

An out-of-state property trust is a way to simplify the process of transferring out-of-state property that you own to beneficiaries after you pass away. Having an out-of-state property trust avoids problems that can arise when the probate court in your home state lacks jurisdiction over your property. When that happens, it can trigger ancillary probate proceedings.

Ancillary probate is a separate proceeding in the state that has jurisdiction over your out-of-state property. It involves more paperwork and court proceedings that could be hundreds of miles away from the executor of your estate. Avoid the delays and hassle by keeping your out-of-state assets out of probate.

What Is an Out-of-State Property Trust?

An out-of-state property trust document is a legal document that appoints a trustee to transfer your out-of-state property to your beneficiaries after your death. This keeps the assets out of probate courts. A successor trustee that you appoint handles the distribution of your out-of-state-property should you die or become incapable of administering the property yourself.

You can choose between an irrevocable or revocable trust. An irrevocable trust permanently transfers property to the control of the trust. Using a revocable living trust allows you to get your property back if you change your mind.

Putting a house or other property into a trust does not mean that you have to leave the house. However, the trust will take control of the process if you pass away or move out of the home. Keep in mind that placing property in a trust does not protect the property from any taxes, such as capital gains taxes that it might be subject to.

Why Is an Out-of-State Trust Important for Estate Planning?

Funding your trust with out-of-state assets such as a vacation home removes the assets from your estate. The trust, rather than the probate court, transfers property to designated beneficiaries. Because the trust is in your home state, the will in your home state can instruct the trust to transfer property without involving out-of-state courts.

Don't Handle It Alone - Get Help from Boyles & Boyles, PLLC

If you are ready to set up an out-of-state property trust for your out-of-state real estate, speak to an estate planning attorney for legal advice. If you live in Florida, call 850-433-9225 to consult with a dedicated attorney at Boyles & Boyles. Let us handle the details so that you can focus on enjoying your property and living your life.

What is a Testamentary Trust?

Testamentary trusts are formed in accordance with guidelines laid out within an individual's last will and testament. In general, trusts are legal relationships governed by a trustee, a third party, which manages assets held by the trust on behalf of beneficiaries of the trust.

The will contains instructions establishing the testamentary trust, which is then used by the trustee to distribute assets to the beneficiaries. Testamentary trusts are not created until after a person passes. It is also important to keep in mind wills may have multiple testamentary trusts.

A comprehensive wealth management strategy will often take advantage of testamentary trusts as they can be an effective means of asset distribution. However, it is but one tool of many and, as with all things, has advantages and disadvantages that must be considered before incorporating it into your will.

When deciding whether to take advantage of a testamentary trust keep these key aspects in mind:

  • Testamentary trusts may hold a portion, or the entirety, on an individual's estate as outlined in their last will and testament
  • Testamentary trusts are not created until after the individuals passing when the executor settles the estate and is stipulated in the will
  • Testamentary trusts may have minors as beneficiaries, in which case assets are only distributed when they reach a specific age
  • Testamentary trusts have certain estate tax advantages that are beyond the purview of this article which should be discussed in depth with your attorney
  • Testamentary trusts ensure that your estate is managed by a professional after your passing
  • Testamentary trusts do not avoid probate!

Requirements for a Testamentary Trust

A testamentary trust typically involves three parties: The Grantor, who establishes the trust in their will, the trustee who manages assets within the trust and distributes them to a single, or multiple, beneficiaries as defined in the will.

While the Grantor may appoint anybody for the role of trustee the appointee is not obligated to accept the position. In which case, the court will most likely appoint an alternate. Provisions in the will define the specific guidelines in which the trust will operate and designates the estates executor. This is a person that will create the trust. However, as testamentary trusts do not circumvent probate, the will must go through the probate process before the trust is established.

Once the probate process has been completed, the trust can be established, and the executor transfers the property into the trust. The assigned trustee manages the assets until the trust expires and the beneficiary receives the assets.

Upon the death of the Grantor, and once the probate process reaches completion, the trust can be created and the executor, or executrix, will transfer the specified assets into the trust. At that point, the trustee manages the assets in accordance with the wishes of the Grantor until the trust expires.

These types of trusts are usually designed to expire upon a specific event, such as a minor reaching a specific age or graduating college. Until that time, the probate court will periodically review the trust to ensure it is being managed correctly.

In review:

A testamentary trust is a wealth management tool, one among many, and has advantages and disadvantages. It is often used to reduce estate tax liabilities, but it does not circumvent probate.

This type of trust can only be established after a person has passed. Assets will only be transferred into it at that time. The last will and testament must contain specific instructions for its creation and its executor will manage the deceased assets as stipulated in the trust guidelines.

A principal advantage of this type of trust is the ability to make specific provisions for how you want your assets distributed after you pass. For example, funds may be allocated for a minor's education and distributed only when they are of a certain age. Another potential use would be the distribution of annual charitable donations in accordance with the wishes of the deceased.

Testamentary trusts should not be confused with a living trust. Living trusts are established during the person's lifetime. For more information on other trusts, including living trusts, call Boyles & Boyles Attorneys at Law at 850-433-9225 today.

Creating a Special Needs Trust in Florida

Do you have a family member with special needs such as a disability? Do they need your help now, or do you worry that they might need help making ends meet? Many people with disabilities receive government benefits that help them cover daily expenses and meet their medical needs. The estate planning attorneys at Boyles & Boyles, PLLC, want you to know more about special needs trusts.

What Is a Special Needs Trust?

Special needs trusts are legal instruments that can enable you to help a beneficiary (the person with the disability in this case) without endangering their state or federal need-based government benefits such as some forms of Social Security and Medicaid. Some government benefits are needs-based, meaning that the beneficiary could lose benefits if they have a new source of income, such as an inheritance.

If you simply give money or assets to a person who is receiving government assistance, you might hurt them financially by reducing their eligibility for government assistance. Placing money or assets in a special needs trust earmarked for meeting that person's needs is one way to help them without that income counting against them in means testing for government benefits.

Special needs trusts designate a trustee and a beneficiary. The beneficiary is the person you intend the trust to provide help to, while the trustee is the person you trust to administer that trust in the best interest of the beneficiary.

A trustee bears the responsibility for:

  • administering the funds following federal and state law
  • ensuring that the beneficiary is meeting tax obligations on income from the trust
  • not using the money in any way that would jeopardize the beneficiary's government benefits

All special needs trusts share the same goal of helping the beneficiary with their daily needs. However, you have different options when structuring and drafting a special needs. Consider each option and its effect on the beneficiary before drafting a special needs trust document.

Types of Special Needs Trust and Other Instruments

ABLE Financial Account

An ABLE account is not a special needs trust but a particular kind of savings account. There are some restrictions on ABLE trusts, including how much money you can put into them, but they can be easier to set up and administer than special needs trusts.

First-Party Special Needs Trusts

A first-party special needs trust stores assets that belong to or belonged to the beneficiary. Another name for a first-party special needs trust is self-settled special needs trust.

For example, consider a person with a disability who receives a windfall inheritance. They could put these assets into a special needs trust so that they do not lose needs-based financial assistance. In exchange for uninterrupted government assistance, the beneficiary has restrictions on how they can use those assets.

Pooled Trusts

Sometimes it can be difficult to find someone with the time and experience to manage a special needs trust. One option for people with disabilities is to take part in a pooled trust. A pooled trust is a large trust that encompasses the assets of many people with disabilities.

Non-profit corporations administer pooled trusts. Pooled trusts handle the paperwork and legal aspects of administering the fund. However, they might not have the personal touch and flexibility of a trust where the trustee is a trusted family friend.

Third-Party Special Needs Trusts

Third-party special needs trusts hold assets that someone else (a donor) has given to the person with a disability rather than assets that belong to the beneficiary.

Do I Need to Set Up a Special Needs Trust?

People with disabilities should consider special needs trusts if they:

  • receive government assistance
  • anticipate having an income that exceeds the asset limit for Medicaid or other government services
  • want to protect their eligibility for benefits

If you want to make sure that a family member with a disability has the resources they need, make a third-party special needs trust part of estate planning. Setting up a special needs trust as part of your final planning relieves your beneficiary of the responsibility of spending down or dealing with the assets that you want to leave them.

How Do I Create and Administer a Special Needs Trust?

A special needs trust document should be free of mistakes so that errors do not cause the beneficiary to lose benefits.

The trust documents should name trust beneficiaries and a remainder beneficiary who will receive the funds in the trust if the beneficiary dies. You should decide who will administer the fund and designate a backup trustee if the first choice is unavailable. The trust document will also outline the distribution and use of the assets in the trust.

Should I Hire an Attorney to Help Me Create a Special Needs Trust?

Due to the complexity of the trust document, the attorneys at Boyles & Boyles, PLLC, recommend that you do not try to create trust documents on your own. Consult with an experienced attorney to weigh the benefits of each type of special needs trust. Ensure that all parties to the trust, including the beneficiary or their power of attorney, fully understand the documents before they sign them.

Find out if a special needs trust is right for you. For a consultation with a knowledgeable attorney on establishing special needs trusts or ABLE accounts in Florida, call Boyles & Boyles at 850-433-9225 today.