Trusts Explained

By Amerant Miami By Amerant Miami | September 11, 2023 | Lifestyle, Sponsored Post,


What is a Trust?

A trust is a legal arrangement in which one party, known as the trustor or grantor, transfers assets to another party, the trustee, to hold and manage those assets on behalf of a third party, the beneficiary. Trusts are established to safeguard assets, manage wealth, and ensure the smooth distribution of assets according to the trustor's wishes.

What are the different types of trusts?

Living Trust

A living trust, also known as an intervivos trust, is created during the trustor's lifetime and allows them to transfer assets into the trust while retaining control over those assets. It helps avoid probate and provides for efficient asset management if the trustor becomes incapacitated.

Revocable Trust

A revocable trust allows the trustor to modify or revoke the trust terms during their lifetime. It offers flexibility and control but does not provide significant protection from estate taxes.

Irrevocable Trust

In contrast, an irrevocable trust cannot be modified or revoked without the consent of the beneficiaries. It offers potential tax benefits and asset protection but sacrifices some control by the trustor.

Florida Hybrid Trust

A Florida Hybrid Trust is a type of trust that combines the benefits of a domestic trust and an international trust. It is a popular choice for international customers who want to take advantage of Florida's favorable trust laws while also protecting their assets from foreign creditors and taxes.

Florida has no state income tax, which can save international customers on taxes on their trust income. Additionally, Florida offers a number of tax exemptions for trusts, which can further reduce the tax burden.


Bypass Trust

Also known as a credit shelter trust, this type of trust allows a trustor to maximize the use of their estate tax exemption by leaving assets up to the exemption amount to the trust for the benefit of the surviving spouse.

Life Insurance Trust

A life insurance trust is designed to hold a life insurance policy, keeping the death benefit outside the trustor's taxable estate and providing liquidity for estate tax expenses.

Discretionary Trust

A discretionary trust grants the trustee full discretion over how and when to distribute assets to the beneficiaries, offering protection from creditors and potential spendthrift behavior.

Generation Skipping Trusts

A generation skipping trust allows the trustor to transfer assets to beneficiaries who are at least two generations younger than the trustor, minimizing estate taxes.

Can I use my will as a trust?

No, a will and a trust are distinct legal instruments with different purposes. A will is a document that specifies how a person's assets should be distributed after their death, whereas a trust is established during a person's lifetime to manage and distribute assets, often bypassing probate and providing additional benefits.

In summary, a trust is a legal arrangement used to manage and protect assets while ensuring their proper distribution to beneficiaries. There are various types of trusts, including living trusts, revocable trusts, irrevocable trusts, and specialized trusts like charitable trusts and life insurance trusts. Contact an Amerant Bank Trust expert today for more information on how a trust can benefit you and your family.


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