Can I Create a Self-Titled Trust in Florida?
One of the most population additions to a comprehensive estate plan is a trust agreement. Given how popular trusts are it is also likely that you will be named as a beneficiary in a trust established by someone else. With that in mind, it is important to understand the different types of trusts and how trusts can help achieve various estate planning goals. For example, a self-titled trust can help you protect your assets. With that in mind, the Coral Gables trust administration attorneys at Stivers Law explain whether you can create a self-titled trust in Florida.
Protecting Your Assets
If you have worked hard all your life to accumulate and grow your asset portfolio you undoubtedly want to protect the assets you have accumulated. Whether you are concerned about creditors, personal liability for business losses, or just your own spendthrift tendencies, it is always wise to include asset protection strategies in your estate plan to prevent the loss of assets. One popular asset protection tool is a self-titled trust.
What Is a Trust Agreement?
At its most basic, trust is a relationship whereby property is held by one party for the benefit of another. The terms and provisions of a trust are reduced to writing in a document referred to as a “trust agreement.” Trusts are broadly divided into living trusts and testamentary trusts with the former activating during the lifetime of the Settlor (the creator of the trust) and the latter typically being activated at the time of the Settlor’s death by a provision in the Settlor’s Will. Trusts can also be revocable or irrevocable. The Settlor of a revocable trust can modify or terminate the trust at any time and for any reason whereas the Settlor of an irrevocable trust cannot.
What Is a Self-Titled Trust and How Might My Estate Plan Benefit from Establishing One?
Many people choose to use a trust agreement as their primary asset distribution tool within their estate plan. Trusts, however, can accomplish much more than just providing a blueprint for the distribution of your estate assets after you are gone.
A self-titled trust, also known as a domestic asset protection trust, self-designated trust, or spendthrift self-settled trust, is a specialized type of irrevocable trust that can also protect your assets from potential threats. The unique aspect of a self-settled trust is that the creator is not only the Settlor of the trust but is also the beneficiary of the trust. Assets that are transferred into the trust become the legal property of the trust. While the beneficiary (you in this case) may enjoy the benefits of the trust assets, the beneficiary has no direct legal claim to those assets because they are owned by the trust and controlled by the Trustee (pursuant to the terms of the trust). In practical terms, this means that a creditor of yours cannot reach the assets to satisfy debts of yours because the trust, not you, owns the assets.
Florida Law and Self-Settled Trusts
State law governs many aspects of trusts and trust administration, including whether self-settled trusts are recognized within the state. As of 2023, less than half of the states recognize self-settled trusts. Unfortunately, Florida is not among the states that allow self-settled trusts. That does not mean you cannot benefit from a self-settled trust; it just means that you need to consult with your estate planning attorney about establishing one in another state.
Contact Coral Gables Trust Administration Attorneys
For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about how administrating a trust, contact the experienced Coral Gables trust administration attorneys at Stivers Law by calling (305) 456-3255 to schedule an appointment.