Florida individuals who have a high net worth may need additional financial arrangements in addition to the standard estate planning documents like wills and health care directives. Trusts can be a particularly valuable tool for these individuals to use.
A trust allows a person to specify terms for how an asset should be managed rather than leaving it directly to a beneficiary in a will. Trusts are particularly helpful for managing assets for minor children because they are not legally able to manage the asset themselves until they reach the age of majority. A trustee is appointed to help manage the asset and has to comply with the specific terms of the trust. The terms may specify when funds should be distributed to the beneficiary, such as when college tuition is due. Parents can take advantage of this feature by waiting for a later age before granting their children sizable assets or distributions.
Another advantage to using trusts is that it provides an asset protection device. Once a person inherits an asset directly, he or he can be subjected to legal claims, such as claims in bankruptcy or divorce court. If distributions are discretionary, beneficiaries might be able to be protected from claims of this nature. Therefore, trusts may be able to continue providing for the health, welfare and lifestyle of beneficiaries without them having to worry about creditors accessing these funds.
Individuals who are contemplating the creation of a trust may choose to first discuss their case with an estate planning attorney. The attorney can provide advice about whom to appoint as the trustee of the trust as well as the types of provisions that can maximize asset protection and preservation.
Source: insurancenewsnet.com, “Why High-Net-Worth Clients Need Trusts In Estate Plans”, Jamie Golombek, June 11, 2014