J. Kelly Kennedy, Attorney/CPA, PLLC

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Attorney and CPA

Trusts are an important part of estate planning

A trust can be a useful part of a Florida estate plan. Trusts may sometimes seem intimidating, but they have several beneficial uses, including reducing estate taxes, protecting assets from creditors and the management of estate assets. And, while trusts are normally associated with wealthy individuals, trusts can be a helpful component of any estate plan.

When a trust is set up, one transfers ownership of their assets to the trust. Another party is designated to manage the assets for the beneficiaries who benefit from the trust.

There are two categories of trusts: revocable and irrevocable trusts. A revocable trust, refers to a living trust, which allows the party that set up the trust to amend or revoke it at any time. But, an irrevocable trust cannot be amended or revoked. Nonetheless, irrevocable trusts provide other benefits, such as asset protection and reduced estate taxes.

In addition, there are several different types of trusts that can address specific needs and goals of the party setting up the trust. A special needs trust ensures that a disabled or mentally ill beneficiary will receive financial assistance without jeopardizing their ability to obtain government assistance. A testamentary trust, which comes into existence at the end of the estate planner's life, can be used in conjunction with a will and provide protection for minor children. A life insurance trust can help reduce the amount of estate taxes that are paid. And, a gift trust can reduce the size of the estate and provide more control over its assets.

As blog readers can see, trust administration can be a useful and important part of an overall estate plan. As such, estate planners must understand trusts and their benefits.

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