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The basics of creating a trust in Florida

Some Floridians who live in the Winter Haven area have probably wondered whether it makes sense for them to create a trust for any of their assets. For anyone who does not have experience with trusts, the idea of creating a trust may sound like a complex task. Likewise, the legal requirements for trust administration might seem daunting. However, trusts can be a good financial planning tool, and they are not really that tricky to understand and create.

The grantor or settlor, which is the person who creates the trust, may set up a trust for a variety of reasons. But, one of the more common purposes of a trust is to provide for a minor child or someone else who is unable to take care of their own financial affairs.

The way that it works is that the grantor sets up a legal entity and then transfers certain assets into the entity. The assets in the trust are for the benefit of whoever the grantor assigns as beneficiaries. The grantor must also assign a trustee, which is the person who manages the trust for the beneficiaries.

Trusts are very flexible instruments, and the grantor can set up a trust to meet their own specific circumstances. For example, the grantor can be the trustee of the trust and appoint a successor trustee for when the grantor dies or becomes unable to manage the trust anymore.

Another benefit of trusts is that any assets in the trust do not have to pass through the probate process upon the grantor's death. In other words, when the grantor dies, the beneficiaries of the trust will get the trust assets without going through the time and expense of having a probate court sign off on the asset transfer.

Trusts are a valuable planning instrument that can serve a variety of purposes. They are really not that complicated to set up, but the grantor should be sure that they understand all of the applicable laws that control trust creation and administration. An estates and trusts attorney can set up a trust to help ensure that it serves the beneficiaries in the way that the grantor envisioned.

Source: USA.gov, "Understanding Trusts," accessed on April 13, 2015

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