J. Kelly Kennedy, Attorney/CPA, PLLC

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Attorney and CPA

When does a living trust make sense?

People in Winter Haven and Lakeland who have read this blog before may know something about trusts. A trust is a legal instrument that allows people to control their assets based on any particular concerns or circumstances in their lives. For example, people may put some of their assets in a trust for the benefit of their children. Through the trust instrument, the person can then set rules on trust administration and how the trustee will distribute the assets to the child.

While this is just one simple example of how people might use trusts, the variations are virtually limitless. But, who needs a trust, and does it make sense for anyone with assets to have one?

Many people think of trusts as a legal mechanism for avoiding taxes when transferring assets to beneficiaries. One type of trust, called a Credit Shelter Trust, can help some people save on estate taxes. But even this kind of trust only really makes sense for people who have many millions of dollars in assets. Furthermore, trusts are useful in many other situations that don't involve tax savings for the distribution of assets.

For some people, a will can accomplish the same objectives as a trust, but without the added expense of creating the legal instrument that goes along it. On the other hand, if a person wants a higher level of control over his or her assets than a will can offer, a trust is the way to do it. If, for instance, a person wants to pass money on to his or her child but is afraid the child will misuse or squander the money, the parent can create the trust so that the child receives the money in smaller increments over a longer period of time.

Trusts are not for everyone, but can be very helpful when a person is looking to control his or her assets in a particular way. Like any other legal arrangement, a trust is only as good as its governing documents. Experienced attorneys may be able to help people in Florida set up trusts that address their needs and are governed by a thorough trust document.

Source: Forbes, "Do You Need A Trust For Your Estate Plan?," Gary Plessl and Kevin Houser, Accessed on July 30, 2015

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