It is not uncommon for Florida residents to own property out of state. It’s also not unusual for people with multiple significant assets to consider setting up a trust to protect those assets both here in Florida and out of state.
A trust is traditionally used for minimizing estate taxes and can offer other benefits as part of a well-crafted estate plan. A trust is a legal arrangement in which a third party, referred to as the trustee, holds assets on behalf of a beneficiary or beneficiaries. Trusts provide great flexibility to families wishing to retain control over their assets while documenting specific instructions regarding the distribution of those assets after death.
Types of Trusts
A living, irrevocable, or asset protection trust can be a great estate planning tool. Trusts offer several benefits, such as allowing assets to pass to your beneficiaries without going through probate and avoiding the claims of creditors. Some can also protect your assets from debt collection or legal judgments.
A living trust is a legal document created while you are still alive. It designates a person responsible for managing your assets for the benefit of the eventual beneficiary (you while you are alive and your heirs when you pass). A living trust allows for the easy transfer of assets while bypassing the often complex and expensive legal process of probate.
An irrevocable trust in Florida is an agreement among your trustee and beneficiaries that cannot be taken back or changed. Once a property is transferred to the trust, you cannot take back property. You also cannot add or remove beneficiaries, nor can you change the terms and provisions of an irrevocable trust agreement.
A domestic asset protection trust is set up for the sole purpose of protecting assets from creditors or lawsuits. It is structured the same as other trusts, in that you establish and fund the trust with assets for beneficiaries (which can be yourself in this case), and you name a trustee to manage the assets.
A Florida land trust is a tool you can use to purchase, hold, finance, and resell Florida real estate or personal property. They can also hold other property-related assets, such as mortgages and notes, but are designed and primarily used for real estate.
There are numerous other trusts, such as a Charitable Trust, Insurance Trust, Pet Trust, and Special Needs Trust. While they all function essentially the same way, they differ in their intended purposes. A good estate planning attorney can help you decide which trust is right for you.
Out of State Property in Trusts
If you set up one of these trusts in Florida, can you include your out-of-state property?
While everyone’s situation is unique, the short answer is yes. In fact, the out-of-state real property likely should be transferred into your Florida trust.
Why do I need a trust to protect my out-of-state property?
Florida is known for its snowbirds, who split their time between the sunshine state and the state in which they raised their families. But many people own property in more than one state, including states in which that person does not live for even part of the year. It’s usually smart to transfer those out-of-state properties or assets to a Florida Trust.
The biggest reason to do so is to save your loved ones from probate – and potentially even from probate processes in different states.
Probate isn’t only for when someone dies without a will. Even a will must go through the probate process. Only trusts can avoid probate, a lengthy, often frustrating, and costly process. Probate could become necessary in each state where the property is located. Your loved ones, in that case, will be dealing with a probate process in each state where a piece of land, vacation home, or timeshare is owned.
When you consider the headaches that your heirs will go through in dealing with each state’s differing laws and re-titling of property, it only makes sense to find a way to help them avoid the hassle. Let’s also not forget that multiple probate processes can be quite costly.
Importantly, all 50 states will recognize a trust regardless of where it was created. This means that out-of-state property placed in a trust in Florida will also escape probate in the property’s state.
Remember, our attorneys at Mortellaro Law can recommend asset protection measures, such as trusts that meet your specific needs. Call our Tampa office at (813) 291-0734, or initiate a chat on this page to obtain more information or to schedule a consultation.
