How Do Trust Accounts Work?

Florida residents create trusts for a lot of different reasons. Trusts might be created as a part of one’s estate plan to guide and direct the use of your assets long after you have died. Trusts might be used to dispense your money to your heirs after you are gone. Trusts might also be used to handle and organize different business dealings while you are still alive. Considering how flexible trust documents are, they can be crafted to achieve an unlimited amount of financial goals with your money.

Essentially, a trust is a legal entity that can own property. The property owned by the trust might be managed by another person, who is the named trustee. The trustee could be the person who created the trust, or the grantor. Alternatively, the trustee could be a responsible and trustworthy person named by the grantor. Ultimately, the trustee is legally responsible for carrying out the terms of the trust to the letter — according to how it was written.

Trusts can achieve a wide variety of financial goals. They might be for the benefit of one person or a group of people. They might be created for the purpose of tax planning, to avoid probate proceedings or to dictate how and when an inheritance will be distributed.

Trusts are very different from wills. A will covers an entire estate (with certain limitations), whereas a trust covers one or more specific pieces of property or accounts. Wills and trusts might also be combined to achieve different goals in a Florida estate plan.

If you have any questions about trust accounts, wills or estate planning, Kitroser Lewis & Mighdoll is here to help. We will review the facts and circumstances of your case and tell you what your legal options are.

Source: The Motley Fool, “What is a trust account?,” accessed Nov. 27, 2015