Florida trust funds are intended to let a person's money continue to be useful, after they pass away. However, they aren't only useful for ultra-high-net-worth individuals. Many people can benefit from the use of a Florida trust.
Investopedia’s recent article entitled “How to Set Up a Trust Fund if You're Not Rich” says that you can place cash, stock, real estate, or other valuable assets in your trust. Work with a Florida trust attorney and decide on the beneficiaries and set any instructions or restrictions. With an irrevocable trust, you don't have the ability to dissolve the trust, if you change your mind later on. Once you place property in the trust, it’s no longer yours but is under the care of a trustee. Because the assets are no longer yours, you don't have to pay income tax on any money made from the assets, and with and estate planning attorney’s guidance, the assets can be exempt from estate and gift taxes.
Tax exemptions are a main reason that some people set up an irrevocable Florida trust. If you, the trustor (the person establishing the trust) is in a higher income tax bracket, creating an irrevocable trust lets you remove these assets from your net worth and move into a lower tax bracket.
If you don't want to set up a Florida trust, there are other options. However, they don’t give you as much control over your property. As an alternative or in addition to a trust, you can have an attorney draft your will. With a Florida will, your property is subject to more taxes, and its terms can easily be contested in probate. You also won't have much control over how your assets are used.
Similar to a 529 college-savings plan, UGMA/UTMA custodial accounts are designed to let a person use the funds for education-related expenses. You can use an account like this to gift a certain amount up to the maximum gift tax or fund maximum to reduce your tax liability, while setting aside funds that can only be used for education-related expenses. The downside to UGMA/UTMA Custodial Accounts and 529 plans is that money in the minor's custodial account is considered an asset. This may make them ineligible to receive need-based financial aid.
For those who don't have a high net-worth but want to leave money to children or grandchildren and control how that money is used, a Florida trust may be a good option. Talk it over with a qualified estate planning attorney.
Reference: Investopedia (Dec. 12, 2019) “How to Set Up a Trust Fund if You're Not Rich”