Can I Or Should I Ever Have More Than One Trust?
You can easily have more than one trust if you so choose. Factors and reasons to create more than one trusts depend on your situation. Any person can create an unlimited number of trusts. A large majority of people may be looking into a revocable living trust. Often, that is all you will need. But then there are some folks who might have an existing revocable living trust that may not be useful to accomplish his or her goals and therefore an additional trust would need to be created. These goals can include asset protection from nursing homes or from creditors to protect your children and so forth or to segregate assets. All those factors can come into play to create more than one trust.
How Do You Counsel Someone Who Is Afraid Of Losing Control Over Their Assets In An Irrevocable Trust?
Whenever someone comes to me for a trust consultation and there is hesitation about control, I always like to determine what is driving their fear of the lost control. Who are they afraid of? Knowing these things helps us tailor the document customized to their situation. In the case of irrevocable trusts, certain irrevocable trusts, depending on what your ultimate goal is, can be setup to maintain some degree of control by the creator or grantor. For example, there are trusts titled or called “Irrevocable Income-Only Trusts” that are used to protect someone’s assets from a nursing home spend down after five years of creating and funding that trust. Under the terms of that trust, the grantor can no longer have control or access to principal distributions during their lifetime. However, case law shows that the creator of this irrevocable trust can change the beneficiaries through a legal term called a “power of appointment”. The grantor can also have authority to remove trustees. Inside a lot of irrevocable trusts these days, the creator can name something called a trust protector and this person could be given authority to change the terms of an irrevocable trust for specified purposes and reasons that the grantor bestows upon the trust protector.
The trust can mostly be tailored to do whatever you want with very limited restrictions. Whatever the creator’s fears when doing all this can be addressed so that the grantor and the attorney can work through scenarios and develop language in the legal document to address these fears.
Does A Trust Always Have Assets In It?
A trust does not necessarily have assets in it. There could be trusts that are created that would be deemed as being on standby. In one instance, people can actually create trusts under the language of their last will and testament. These are called testamentary trusts. When someone creates a testamentary trust, there are no assets when you sign the will and there are no assets in the trust; that only occurs after someone passes away. Essentially, that type of trust is on standby until an event occurs. You can create standalone inter-vivos or lifetime trusts to accomplish the same thing and not put assets in the trust during your lifetime. You can create triggers with beneficiary designations or other trusts that say, “transfer assets to this unfunded trust at a specific time, date or event.” You can create trusts that are not funded with assets immediately, but insofar as wanting to get your money’s worth for doing the work, you would want to direct when the unfunded trust gets funded.
Are Assets Held In A Trust Always Protected From Creditors?
Assets can be protected from creditors depending on the language of the trust. For someone of modest wealth of under $5 million, nearing or at retirement, seeking credit protection by using a self-settled revocable living trust, then the trust is not protected from creditors. Florida law is clear that by putting your own money into a trust over which you have free and full control of amendment over and full authority to receive distributions, you have not protected that money from creditors. In order for the money inside the trust to become protected from the creditors, you would have to give up rights to control the trust and access to principal distributions if you are doing a self-settled trust. If you are looking for asset protections for immediate creditors, you will need to consult an asset protection attorney. Depending on your net worth, you may also want to consider offshore trusts or state’s utilizing domestic asset protection trust statutes.
If you are a person who has a beneficial interest in a trust that you did not create yourself, then in many instances those trusts will be protected from creditors. A trust for your benefit where the money came from a third party and not your own personal funds, when there is a spendthrift provision, are creditor protected. Those are typically created by a grantor who has children or other family members that he or she is looking to protect from creditors. Creditors can include bankruptcy creditors, car accident and personal injury claims. The trust can also prevent the loss of assets during a divorce as the trust will be segregated except for support obligations ordered from the divorce proceedings. The general idea is if you are creating a trust for yourself, in most instances, it will not be protected from creditors, but if you are receiving an inheritance held in trust, then most of the time it is going to be creditor protected.
For more information on Having More Than One Trust In Florida, an initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (904) 398-6100 today.
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