There are many types of trusts, some of them revocable and others irrevocable.
In addition, some trusts are created while a person is alive (living or inter vivos trusts) while others are created upon
a person's death as set forth in that person's Will (testamentary trusts).
Revocable Living Trusts (Inter vivos trusts)
The revocable living trust is the most common form of living trust. The revocable
living trust has many uses. They include avoiding probate administration, avoiding guardianship administration of the property
of an incapacitated person, providing for professional investment management and providing for control and management of the
trust after the death of the creator (grantor) for the benefit of minors, incapacitated beneficiaries and spouses of second
marriages. A revocable living trust will not protect the assets of the grantor from judgment creditors of the grantor.
In order for a revocable living trust to provide the benefits for which it
is designed, such as avoiding probate administration and avoiding guardianship administration of the assets of an incapacitated
person, the grantor must transfer legal title of his or her assets to the trustee of the revocable living trust. Specific
language should be utilized to designate the owner of real estate, bank accounts, brokerage accounts, certificates of deposit,
stocks, bonds, life insurance policies and annuities.
The revocable living trust is created by a written agreement between the grantor
and a trustee. Under Florida
law an individual can be both a grantor and trustee. Because of the flexibility provides by a revocable living trust it should
be created with the assistance of an attorney thoroughly familiar with the issues involved after a careful consideration of
the grantor's individual circumstances and concerns.
Irrevocable Living Trusts
Although less common than the revocable living trust, an irrevocable living
trust can be used in a number of situations. Among them an irrevocable living trust can be created to own a life insurance
policy to provide liquidity for estate taxes, or provide for the care of beneficiaries after the death to the insured. Additionally,
an irrevocable living trust can be used to fund charitable giving, or to deal with a second personal residence or to provide
for grandchildren, protect assets from in the event of a judgment creditor. There are a number of contexts in which an irrevocable
living trust would suit an individual's concerns more fully than a revocable trust.
There are a wide variety of irrevocable trusts that can be used in many different
situations. A brief list of some of the possible trusts is as follows:
1. Credit Shelter Trust
2. Marital Deduction Trust
3. Generation-skipping Trust
4. Trust for Benefit of Minors
5. Life Insurance Trust
6. Charitable Remainder Trusts
7. Charitable Lead Trusts
8. Qualified Personal Residence Trusts
Certain complex irrevocable trusts, such as grantor-retained income trusts,
grantor-retained annuity trusts and grantor-retained unitrusts can provide estate tax savings by reducing the deemed value
of gifts made to children and grandchildren. However, because the consequences of an irrevocable trust are not alterable the
irrevocable living trust must be created only with the advice of a highly skilled attorney experienced with the significantly
complex matters involved.
Testamentary Trusts
A testamentary trust is
created according to the terms of the testator's Will. Testamentary trusts only come into being after the testator has passed
away and are governed by the terms of the Will. The testamentary trust can be used to deal with estate tax matters as well
as many issues that may be addressed in a revocable living trust. There are many factors that play into the decision to use
a living trust as opposed to a testamentary trust.
