A trust is a legal arrangement in which the trust maker (referred to as “trustor” or “settlor”) transfers the ownership of assets to a trustee (fiduciary). The trustee holds nominal ownership of the assets on behalf of one or multiple beneficiaries appointed in the trust document.Ā
In this article, you will discover what trust funding is and why it is fundamental to protect your estate.
What is Florida Trust Funding? – The Fundamentals
The term “trust funding” refers to the transfer of assets from the name of an individual or entity to a trust. When a Florida resident dies owning assets solely in his or her name, these assets must go through probate.Ā Ā
During probate, a court will supervise the administration and distribution of the decedent’s estate according to the provisions of the last will. Depending on the size and value of the estate subject to probate, it may result in a time-consuming and expensive experience for the beneficiaries.Ā
Asset distribution can happen only after probate administration is complete, which means the beneficiaries must patiently wait to receive their fair share of the estate. With a Florida trust, you can avoid probate and ensure your loved ones an efficient inheritance process upon death.
Property titled in the name of a trust is no longer considered part of the trustor’s estate. After the trustor’s passing, the assets held in the trust must be distributed by the trustee according to the terms laid in the trust instrument.
A trust allows you to control when and how your assets will be distributed upon death – all without court intervention.
What Happens If a Trustor Fails to Fund a Florida Trust?
A trust exists only for the benefit of the individuals listed as beneficiaries in the trust instrument. If a trustor fails to fund a trust in Florida, the assets titled solely in his or her name will likely go through probate upon death.
State law provides that trust without funds does not have a reason to exist. If a trust was never funded, the trustor’s estate plan is severely compromised, and the beneficiaries are exposed to uncertainty. For example, failing to fund a trust may result in the termination of the arrangement.Ā Ā
Florida Statutes Ā§736.0414 (1) provides that “after notice to the qualified beneficiaries, the trustee of a trust consisting of trust property having a total value less than $50,000 may terminate the trust if the trustee concludes that the value of the trust property is insufficient to justify the cost of administration.”
Florida Statutes Ā§736.0414 (2) adds that “upon application of a trustee or any qualified beneficiary, the court may modify or terminate a trust or remove the trustee and appoint a different trustee if the court determines that the value of the trust property is insufficient to justify the cost of administration.”
One of the greatest advantages of trusts is flexibility, as they allow you to set up the terms of the arrangement to attain one or multiple purposes.
Whether you want to use a trust for tax-saving purposes, asset protection, probate avoidance, or any other reason, it is impossible to succeed without proper funding. The best approach is to consult with a Florida estate planning attorney to find a strategy tailored to your case.Ā Ā
Optimized Strategies for Trust Funding in Florida – Immediately Contact Jurado & Associates, P.A.
A well-versed trust lawyer from Jurado & Associates, P.A. is willing to find an ideal solution for your case. Contact us by calling (305) 921-0976 or emailing [email protected] for an individual assessment.Ā
