Getting Better Acquainted with Trusts by KulasLawFL


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     A Lot Of People Might Have Heard
  the Term “Trust” But Very Few Of Them
Have A Good Idea Of What Trusts Really Are

              ROBERT J. KULAS
          For people just beginning the estate planning process, understanding
          some of the terminology involved can be a challenge in and of itself.
          This is especially true when you consider trusts. A lot of people
          might’ve heard the term “trust” used here and there, but very few of
          them outside the estate planning or financial planning arenas have a
          good idea of what trusts do, how they work, and why you might ever
          need to create one. To get a better                       ●   ●     ●
          understanding of these useful and powerful             A trust can
          estate planning tools, let’s take some time to      become the legal
          look at trust in more depth.                         owner of some
                                                                or all of your
          YOUR HOLDING COMPANY                                    property.
                                                                    ●   ●     ●
          It can be useful to use an analogy to better
          understand what a trust is. Imagine that you have decided to create
          your own company. This company exists for only one purpose: to own
          some of the property you already own. Even though the company has
          no physical presence, never produces any products to sell to
          consumers, and never hires any employees, your company is still a
          legal entity. Because you created it correctly, the law says that your
          company can own property.

          This is very similar to how a trust operates. Once you decide to create
          a trust, that trust can become the legal owner of some or all of your
          property. Depending on the type of trust you choose to create, that
          trust can also provide you with certain benefits that simple property
          ownership doesn’t convey.


Getting Better Acquainted with Trusts                     2
          Now that you’ve decided to create your holding company/trust, there
          are certain steps you will have to take. Your estate planning lawyer
          will walk you through the process, but here are some of the basics.

              The trust agreement. The actual physical document you
                have to write that establishes the trust is known as the trust
                agreement or the trust instrument. This document will contain
                specific terms and choices that only you can make. When you
                choose to create a trust you become known as the trustor, or
                sometimes the settlor or the grantor.
              The trust manager. In your trust agreement you have to
                identify key people. One of the most important people you have
                to identify is the trustee. The trustee will serve as the manager
                of your trust, keeping track of all the trust property and making
                sure it’s used properly and in accordance with the terms you
                establish. The trustee doesn’t have to be a person, as it can also
                be an organization such as a bank or trust company.
              The beneficiary. The persons or organizations that get to
                benefit from or use the trust property are known as the
                beneficiaries. Just as you would name a beneficiary who will
                receive a payment from your life insurance policy, you also get
                to choose who the beneficiaries of the trust are. Depending on
                the circumstances your beneficiaries can be anyone from a
                charity to your children, or even yourself.
              The property. When you decide to create a trust you have to
                take some of your property and transfer it into the trust’s name,
                effectively making the trust the new owner. The trust

Getting Better Acquainted with Trusts                      3
                instrument typically contains a list of the property the trust
                owns. This is often known as the trust schedule of assets. This
                schedule of assets is important because it allows the trust
                manager to easily identify the trust property, and also guides
                you, the trustor, through the funding process. (Funding is the
                process you have to go through in order to take property out of
                your name and transfer it into the trust’s name.)


          One of the most common questions people have after they learn a
          little bit about trusts is how transferring some of your property into
          the trust’s name affects your ability to control that property. While
          there are numerous types of trusts, each of which has its own benefits

Getting Better Acquainted with Trusts                    4
          and drawbacks, transferring your property into a trust is not the same
          as giving it away to someone else.

          In many situations, such as where you create a revocable living trust,
          you maintain total control over all trust property. Your estate
          planning lawyer will explain this process in more detail, but for now
          just realize that transferring your property into a trust is very
          different than giving it to someone else because you either retain
          control of it, receive its benefits, or both.

          Even though all trusts operate under the same basic principles, the
          variety of trusts available to you is more than you can imagine. Some
          trusts convey certain types of benefits, while other trusts convey
          completely different benefits. Here are a few of the most commonly
          used trusts in Florida.

              Revocable Living Trust. Also known as an inter vivos trust,
                a revocable living trust gives you the ability to avoid probate.
                After you die and leave behind property in Florida, that
                property has to go through the probate process. However, if you
                create a revocable living trust and use that trust to own your
                property, you can avoid probate.
              Special Needs Trust. If you are a parent with a child with
                special needs, you can use a special needs trust to protect the
                child’s financial future. The trust allows you to give your child
                an inheritance or gift while still allowing the child to receive

Getting Better Acquainted with Trusts                     5
                government benefits that have asset limitations associated with
              Testamentary Trust. If you want to leave an inheritance to a
                young child or grandchild, a testamentary trust can allow you to
                do this. The trust will own the property until the child becomes
                old enough, or until the child meets conditions that you

          No two estate planning situations are identical, and deciding what
          trusts are appropriate for your needs is something you cannot do
          without the assistance of an experienced estate planning lawyer. Even
          if you aren’t really sure how trusts operate, your lawyer can guide you
          through the process of trust creation and explain exactly how these
          instruments help you.

Getting Better Acquainted with Trusts                     6
          About the Author

                                Robert J Kulas

                                Robert is the founder and principal shareholder in the Port
                                St. Lucie and Vero Beach law offices of Robert J. Kulas,
                                P.A. Because he believes that helping his clients manage
                                their personal affairs wisely is one of the most worthwhile
                                professional activities he can pursue, he has devoted his
                                practice exclusively to estate planning.

                                 Robert has invested considerable time and energy helping
          to educate others in estate planning and is widely regarded as a dynamic speaker
          who can make even the most complex estate planning issues easy to grasp. He
          provides free monthly seminars to inform the public on the importance of proper
          estate planning. Over the past fifteen years, thousands of people have come to
          hear him speak. “Helping people understand their options for estate planning is
          very important to me,” Robert said. “I like to think that people in our community
          can look to me for the kind of quality information they need to decide what is best
          for them and their families.”

          About Robert J. Kulas, P.A. Attorneys at Law
          Robert J. Kulas, P.A. Attorneys at Law is a full service estate planning and wealth
          preservation law firm servicing Port St. Lucie and Vero Beach, Florida.

          The firm is dedicated to providing you with quality estate planning resources, so
          you can become familiar with all of the existing options. When you visit or call the
          office, we want you to feel comfortable discussing such an important issue
          concerning both you and your family. We want to arm you with the information
          you need to make an informed decision about your family's future.

              East Lake Professional Center                    Univest Building
            2100 SE Hillmoor Drive, Suite 105          2770 Indian River Blvd., Suite 321
                Port St. Lucie, FL 34952                     Vero Beach, FL 32960
                 Phone: (772) 398-0720                      Phone: (772) 778-8481

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