When a person dies, all their property becomes known as their estate. A Florida probate court must then oversee the process of settling the estate, paying off any remaining debts and distributing the remaining assets to heirs and beneficiaries. This process is known as probate. If the person left a will, this will help resolve a lot of questions and save a lot of time, but even so, the probate process can be slow and complicated. It can also cost money, which comes out of the estate. That means there is less money to go around when it comes time to distribute the assets to the heirs.
For these reasons, many people plan their estates to minimize the effect of probate. One of the best ways to do that is through creating a trust.
Trust, defined
A trust is a way of owning property. The person who creates a trust is known as the grantor. This person transfers their assets to the trust, where they are managed by a trustee. The trustee has a legal duty to faithfully manage the assets for the benefit of the people the grantor has named as beneficiaries.
Trusts can be modified to meet many needs, but one of their most common uses is to avoid probate.
When a grantor transfers assets to a trust, the grantor no longer owns those assets. Therefore, those assets are not part of the person’s estate when they die. Because they are not part of the estate, they do not have to go through probate.
In this way, the grantor streamlines the distribution of property to their heirs and beneficiaries.
Just the beginning
As noted above, probate avoidance is just one of the uses of a trust. This type of estate planning tool can be tailored for many other purposes.