J. Kelly Kennedy, Attorney/CPA, PLLC

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Attorney and CPA

How is a trust established?

Florida residents often make it a point to set various goals they would like to achieve. In achieving these goals, certain steps must be taken along the way, and things often must be done right during these steps.

The process of estate planning certainly follows this mold. Individuals may have broad goals they would like to achieve through their estate plan. The challenge is in getting the details right so these goals can be put into effect.

For example, last week this blog discussed the advantages of using a revocable trust, such as allowing a person's assets to avoid probate and creating certain tax advantages. While trusts can be advantageous, there are certain steps that must be followed to create and administer the trust.

One key step is to properly fund the trust, which requires placing some assets into the trust to give it effect. These assets could be bank accounts, real estate, investments or other assets. Regardless of the type of asset, however, it must be formally transferred to the trust or they may be subject to probate.

For instance, a stock certificate might make some reference to the trust or the trustee. The person might also choose to name the trust as a beneficiary of a life insurance or other policy.

In the case of real estate, it is important that the deed reflect the trust's ownership over the property. There may also be considerations involving other title issues, existing mortgages or other restrictions to take into account.

What's more, it might not be wise to transfer certain kinds of assets into a trust. Accordingly, the properly preserve assets and accomplish one's goals, the facts and circumstances of each person's estate should be taken into consideration.

Source: The Florida Bar, "The revocable trust in Florida," March 2014

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