Christmas is around the corner, and that means that Santa is on his way. This year, consider getting your kids a gift that will truly make a long-lasting impact: a trust fund. In this article, we will discuss what a trust fund is and how it works, dispelling any misconceptions you may have about this important financial tool.

What Is A Trust Fund?

You might know of the term “trust fund,” though you have likely heard it used in a derogatory fashion. Trust funds have a reputation of being only for the uber-wealthy, but that couldn’t be further from the truth. This estate planning tool allows you to put aside money and, if you want, assets that will be distributed to the beneficiaries you name on the trust. The distribution will take place at a later date of your choosing. Basically, a trust fund is created to house money and assets on behalf of another person. 

A trust fund is usually executed and managed by a licensed estate planning attorney. The trust fund requires a grantor (you, in this example), trustee, and beneficiary. The grantor sets the terms for how he or she wants the money gathered, held, and distributed, and the trustee executes the grantor’s directives. The beneficiary, as the name suggests, receives the cash and assets from the fund at a predetermined time. 

What Happens to Money In A Trust Fund? 

Trust funds can contain a large number of different assets, including bank accounts and money, businesses, heirlooms, and other types of investments. The assets remain in the trust fund until certain circumstances are fulfilled. Once these terms are met, the trust fund’s proceeds are distributed to beneficiaries. 

How To Set Up A Trust Fund

There are a few main steps to setting up a trust fund. Everyone’s financial situation is different, but these general steps apply to most people. Here are the steps: 

1. Set Goals. Be clear about why you’re setting up the trust, as well as what terms and assets you want to include. Make sure that your children get what you want them to get. Clarity is very important when setting up this type of document, hence why legal counsel is a must-have.
2. Choose What Type of Trust. Your attorney will help you determine the type of trust that is best for you. For example, a revocable trust, one of the most common types, is flexible, allowing you as the grantor to make changes in certain circumstances.
3. Determine the Terms. Name your trustee, as well as who will get what. Determine distributions and provisions, as well as any other details that will help you achieve your “Step 1” goals.
4. Create The Trust Documents. After making all your decisions and getting your information together, you will set up your trust fund, with legal counsel, abiding by Florida law.
5. Fund the Trust. You can fund your trust through real estate, bank accounts, life insurance policies, and more. The trust will not function as intended until you fill it with assets. 

Advantages And Disadvantages Of A Trust Fund

As with anything, a trust fund has its pros and cons. While a trust fund is far more wide-ranging than you might have thought before reading this article, this financial tool is still not for everyone. 

Advantages of a trust include: 

• You can avoid probate. 
• There may be tax benefits involved (legally). 
• You can customize and control the way in which your wealth is distributed. 
• You can provide for your beneficiaries’ financial future. 

Disadvantages of a trust include: 

• The structure can be complex.
• A trust can be expensive to both maintain and establish. 
• Trustees’ powers are restricted by the trust deed. 

Hopefully, this article has opened your eyes to what a trust fund can do for you and your family. It isn’t just a tool for the wealthy—it is great way for families of all economic backgrounds to ensure their kids have a stable future.  Contact us if you have questions and to get started. 

This might shock some people, but 2022 is coming to an end in less than one month. This year has been eventful, filled with ups and downs, new memes, an election, celebrity kookiness, and more as we have filled out yet another page in this chapter of American history. How did your year go? Did you accomplish everything you wanted? 

As we look back at our year, it is important to consider whether we made progress with our long-term goals. For example, did you set up an estate plan? If you didn’t have this as a goal, you should. In this article, we will discuss why an estate plan is important. If you haven’t set up one in 2022, make this your New Year’s Resolution (and then make sure you then accomplish it). Listed below are the life-changing benefits of protecting your assets and loved ones through an estate plan. 

Beneficiaries Are Protected

When you die, who gets your assets? When we refer to assets, we are talking about property, cash accounts, physical items, and similar possessions. At some point, your assets will no longer be your own and, without an estate plan, they could wind up in the hands of your creditors, if not the government (eek!).

Through an estate plan, your beneficiaries are protected, and your assets are distributed expeditiously, tax-efficiently, and legally. Through documents like a last will and testament, you can ensure that your possessions go to the people you want and no one else, inadvertently.

Here are some of the benefits of a last will and testament, a document that is the final expression of where you want your assets to go after you die: 

• You control what happens to and with your property after death.
• You can leave assets and property to specific people. 
• You can appoint certain persons to manage and handle the distribution of your property. 
• A will can, if done properly, be the “last word,” minimizing disputes and feuds between heirs and other relatives.

A last will and testament is just one example of the many legal documents and tools in an estate plan, some of which you learn about when you read through this article.

Kids Are Protected

If you have minor children (kids who are under eighteen), then you especially need an estate plan, not only so that you can name your children as your beneficiaries, but also so that you can set up guardianship papers. 

Guardianship papers are a “worst-case scenario” type of documentation. These papers detail who will be your kids’ legal guardians in the event that something terrible happens to you (and your spouse, if you have one). Talk to your proposed guardian before appointing them to this big role. Make sure they are willing to take on this responsibility, and ensure that they can take care of your kids’ day to day needs, much in the same way you would.

Probate Is Minimized (Or Even Avoided)

Though a last will and testament must go through probate, a trust does not. A trust is a common tool in estate planning. It is a three-party fiduciary relationship in which the grantor (you) gives title of an asset to a third party for the benefit of a beneficiary. 

At a time you specify, such as when you die, the title to the asset will pass to your intended beneficiary. The trust does not have to go through probate, which protects you and your family’s privacy. It is easier to transfer title of your assets via a trust than if you had to pass through the time and expense of probate court. 

Assets Are Managed Even If You’re Incapacitated

While many documents in an estate plan deal with what to do after you die, there are some, such as a healthcare directive and power of attorney, that involve what happens to you if you are too incapacitated, due to illness or injury, to make decisions for yourself. Through these documents, you can ensure your wishes are still honored. Here is a brief overview of each: 

• Healthcare directive. This “living will” details what you do and don’t want, as far as medical treatment and lifesaving care goes. This document, which often deals with resuscitation and similar procedures, is very personal. It is also important to ensuring your wishes are met, even if you can’t communicate them. 
• Power of attorney. A power of attorney is a trusted person that you appoint to manage your financial and/or healthcare affairs in the event you are unable to make decisions on your own behalf. 

Again, these documents are just two of many examples of how estate planning can help you take control of your present and future. Contact a WFP attorney today to create your own estate plan.  

The day after Thanksgiving is known as Black Friday, and a lot of people love to shop on that quasi-holiday, as stores across the country have great sales. We’ve all seen the footage from Black Friday—the fights, stampedes, and general bad behavior. In the face of this greed, you might wonder if loving to shop and obtain assets is wrong. 

It’s not, though stampeding someone to get a brand-new coffeemaker on Black Friday certainly is. There’s nothing wrong with working hard to purchase something you really want. And, when you get the item you want, you should have the tools to protect it. Asset protection is a series of techniques that legally insulates assets from creditors and civil judgments. 

Unlike Black Friday stampeders, asset protection follows the law to a T. In this article, we’ll talk about different asset protection tools and how they can benefit you. 

Who Is Asset Protection For? 

Certain types of people, such as business owners and professionals, are at a higher risk of incurring a lawsuit than others. For example, dentists face a higher number of lawsuits than everyone else, and 39% of these suits are successful (Bureau of Justice). Of those awards, 21% are over $250,000 (the average is $53,000, says the BoJ). 

Right or wrong, America is a litigious society. That is why the field of asset protection has popped up as a semi-defense to these creditors seeking judgments. Here are some tools to note when it comes to protecting your assets. 

Land Trust

In Florida, a land trust separates equitable ownership and legal title of a parcel of land. The person who establishes the trust is the beneficiary, and they are the ones who contribute or borrow money to buy the property (i.e. the economic owner). Land trusts provide you with privacy of ownership of this real property, and they are a great asset protection shield. 

Business Structures 

Some business structures, such as a corporation or LLC, provide asset protection from creditors. An LLC in particular is the most popular tool for holding real estate. 

Corporation

Corporations can help protect assets, as they work as a limited liability tool for officers, directors, and shareholders. This business structure can protect your assets from those coming to collect corporate debts or other claims. It can even serve, sometimes, in the right conditions, as a barrier to a breach of contract judgment (something many business owners experience).

LLC

An LLC is not only a fantastic way to hold real estate; it also is a great protection tool for stock market investment portfolios. A Limited Liability Company has the same asset protection benefits that a limited partnership does. A creditor cannot take your interest in an LLC, and a judgment usually cannot take your personal assets in the event of a business dispute. 

Equity Stripping 

Equity stripping reduces the amount of equity you hold in a property, making it unattractive to creditors. Unfortunately, this tactic, which became widespread in the 2000s, has also been used by predatory lenders who want to take advantage of homeowners who are facing foreclosure. Though equity stripping can be successful, it does not always work. Tax liens, for example, will always trump whatever lien you levy against your property, wrecking chances you have at protecting your assets.

Offshore Trust 

This conventional trust is formed under the laws of an overseas (offshore) jurisdiction. This estate planning tool, essentially, grants an individual some jurisdiction outside of America. The individual’s assets are transferred overseas, where they are generally placed under the supervision of estate plan/financial managers. An offshore trust is asset-protective, but it is expensive to set up, generally costing between $12,000 and $25,000. 

As you can see, there are multiple ways to protect your home, some of which are not included on this list. Talk to an estate planning attorney today if you feel that asset protection fits your financial situation.

Well, we can tell you right now what we’re thankful for: being experts at drafting estate plans. Thanksgiving is around the corner, and, just from the name, we all know that this holiday is a season to be grateful for what you have. This year, Thanksgiving (AKA Turkey Day) falls on Thursday, November 24th.

This annual national holiday celebrates the “harvest” and blessings of the past year. Most Americans consider their holiday to be based on a harvest feast in 1621 that was shared between the Wampanoag Native Americans and the English colonists (Pilgrims). Thanksgiving also takes place in Canada, Saint Lucia, Liberia, and Grenada, and there are similar festivals in Japan and Germany, too.

If you think of your assets as a Thanksgiving dinner, what’s the “turkey”? Chances are, your home is your “main course,” as, if you own your home, it is probably the most expensive, largest asset you have. In this article, we’ll talk about different ways you can protect your abode through estate planning. 

Home Protection Strategies

You’ll want to contact an estate planning attorney to discuss these home protection strategies. Deciding what you want to do with your home is a financial, emotional, and logistical decision that you’ll want to talk to your family about before going ahead. 

Some of the main options for home transfer include: 

• Co-Ownership
• A Will
• Revocable Trust
• Qualified Personal Residence Trust 
• Through A Sale 

Below, we’ll go through each tool individually. 

Co-Ownership

This is a pretty simple method. A lot of people put their kids as co-owners on their house deed. If the deed lists another person as a joint tenant, that joint tenant can become a co-owner when the deed is changed. When the original owner dies, the child can automatically take ownership of the house. Note: you’ll have to think about taxation when considering this approach.

A Will

Of course, you can always use a will to pass your home to someone. The owner can put the home as an asset in the will, though you will still have to pass through probate. Probate can be time-consuming and expensive, and there are privacy concerns, as wills are, generally, public documents. 

Revocable Trust

This legal structure allows the trustee or grantor to retain control over the assets during their lifetime. They can specify when and how their assets are passed to beneficiaries. The house can be placed into this trust, and, upon death of the creator, the assets will be quickly, private distributed with no need to go through probate. The homeowner will have control or use of their home throughout their lifetime, and efficient distribution will occur upon their death. 

Qualified Personal Residence Trust 

A QPRT, as it’s known, is a way to move a primary/vacation residence out of your estate using a reduced gift tax cost. The home is transferred to the trust right away, though the owner retains the right to live there during the QPRT term. They are still, during this term, responsible for all aspects of ownership. The QPRT will have an end date, upon which the home will transfer to a beneficiary. 

Note: a transfer on death deed is permitted in some states, but Florida does not permit this. In Florida, there has been no adoption of the Uniform Real Property Transfer on Death Act. 

Through A Sale

Of course, you can always sell the home to transfer it. If you don’t think your kids will want your home, consider selling it and, later in life, renting a place to live. Maintenance, lifestyle, and health are all factors in whether this will work for you, and you’ll also want to consider the tax impacts of your decision. 

Your home is likely your largest, most expensive asset, and you will want to make sure that you distribute or dispose of it in the way that works for you. If need be, contact an estate planning attorney to talk about transferring your home, and have a safe, happy Thanksgiving! 

This Friday, November 11th, we’ll celebrate a holiday that calls on us to remember our veterans and what they have sacrificed to keep us safe. Veterans’ Day has been observed for sixty-eight years, and it is a federal holiday, which means a lot of people have the day off to reflect. 

While you’re reflecting, consider focusing on what truly matters in life: your family. Estate planning can be an excellent way to protect your family after you pass on. Estate planning, in a nutshell, is the process of arranging and anticipating, during your life, for the management and disposal of your estate when you pass away. It can be a gloomy topic, but we choose to look at estate planning as a celebration of life and a way for your legacy to live on. 

Protective Estate Planning 

The thing about estate planning is that it doesn’t work if you drag your feet. If you’ve been thinking about getting an estate plan but haven’t done it yet, consider this your wakeup call to meet with an attorney. There are five main components to an estate plan, though there are a lot more tools you can use besides these main five. 

Here are the five main components of a solid estate plan: 

• Wills And Trusts. Though they’re in the same section in this article, wills and trusts are two different things. A living trust is a legal document that is established during your lifetime. It transfers assets to a trustee to be distributed upon death to your beneficiary. A trust bypasses probate court, which makes it an attractive option. Wills, on the other hand, are last expressions of your final wishes for your assets. They go into effect after you die, and they must pass through probate court.
• Medical Or Healthcare Power of Attorney. This power of attorney is a trusted individual who you appoint to make your financial or healthcare decisions if you are too incapacitated to do so. This PoA acts on your behalf and having such a designation can be very important for your wellbeing. 
• Durable Power of Attorney. A PoA is a written document that designates another person as your agent to make decisions on your behalf. The Durable Power of Attorney covers a wide range of business and legal matters. 
• Living Wills/Advance Directives. Living wills/advance directives are legal documents that specify the medical treatments you would or wouldn’t want to be used to remain alive in the event of a medical emergency. It can also detail your decisions on pain management and organ donation. As you can imagine, this document is very personal to the creator. 
• Beneficiary Designations. A beneficiary designation lets you transfer assets to individuals no matter the terms of your will. These designations are usually used when a retirement account, life insurance policy, or financial account are established. Your beneficiary gets the proceeds of the account when you die.

Asset Protection vs. Estate Planning 

Estate planning is an excellent way to manage your affairs and ensure things are in order when you die. Estate planning is different from, though no less important than, asset protection. 

Asset protection consists of a body of legal techniques, which abide by the law, that protect the assets of individuals and entities from judgments and creditor claims. Asset protection planning insulates assets from creditor claims without committing tax evasion or perjury. Insurance, transferring assets, retitling assets, creating a trust, and more are all legal, useful ways to insulate your property and money from civil judgments. 

Both estate planning and asset protection are necessary for those who want to ensure that their assets are distributed in the best way possible. Contact a WFP estate planning attorney today to learn more.