J. Kelly Kennedy, Attorney/CPA, PLLC

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What does funding a Florida trust mean?

Many Florida residents are likely aware that planning for the future is essential in the modern world. Whether trying to figure out how to send the kids to college, or how much you'll need for retirement, planning for your financial future can make a huge difference when tomorrow comes. Of course, eventually, we all run out of tomorrows, but planning may be necessary even for that time. This is the area of estate planning, where you determine how you would like to distribute your possessions and assets among those you care about once you gone.

One way to do this is through the use of a trust. Readers may recognize that this blog has touched on several aspects of trusts, including the differences between revocable and irrevocable trusts, and some of the useful things trusts can accomplish in a proper estate plan. It may also be obvious that the correct establishment of a trust is very important. However, many Floridians may not realize that establishing the trust is about more than how well the trust documents are drafted.

You see, there is a second aspect of trust establishment, and that is funding the trust. But, what exactly does this mean, and why is it important? Funding a trust is the way that the assets that one wishes to be protected by the trust instrument are placed into the body or 'corpus' of the trust. This means that they need to titled correctly, or otherwise modified so that they are legally part of the trust. This is important, especially in revocable trusts where the trust maker is often the trustee, because if not done correctly it can cause those assets to be probated, the avoidance of which is generally a main purpose of creating the trust in the first place.

So, not only to Florida residents have to decide whether a trust is right for them, what kind of trust to use, and who to name the trustee, they need to know how to place their assets correctly so that the trust covers them. Those who have questions about these potentially fraught decisions may wish to consider consulting an experienced estate planning attorney.

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