Trusts are flexible estate planning tools that offer advantages for different strategies, helping individuals fulfill their personal goals while protecting their estate against unforeseen circumstances. In this article, you will find out how to open a trust account in Florida.
What is Florida Trust Account? – Understanding the Concept
A trust account is a type of account created to hold funds designated in a trust instrument for one or multiple specific beneficiaries. The two key elements of trust accounts are:
- The funds held in trust can only be accessed by the individuals named in the trust instrument
- The funds held in trust can only be used for specific purposes outlined in the trust instrument
If establishing a standard trust is a complex task, creating a trust account and ensuring it will fulfill its purpose requires legal expertise. Consult with an experienced Florida trust attorney to draft a trust tailored to your personal need and goals.
How to Open a Trust Account in Florida – Taking a Closer Look
Setting Up a Valid Florida Trust
The first step to opening a trust account is to create a trust. There are two types of Florida trusts – revocable trusts and irrevocable trusts. While the trust maker is still alive, revocable trusts can be amended, modified, or even revoked.
Once signed into existence, irrevocable trusts cannot be modified, amended, or revoked. If the trust maker changes his or her mind, it is not possible to go back and change the trust instrument without court intervention.
Depending on one’s estate planning purposes, each type of trust offers specific advantages and disadvantages. Legal counseling is fundamental to identifying the right trust option and adjusting it to each individual’s needs.
Designating Appropriate Trustees and Beneficiaries
In a trust, a trustee (fiduciary) holds nominal ownership of property on behalf of the trustor (the person who created the trust) for the benefit of one or more beneficiaries. Choosing a reliable person to serve as the trust’s trustee is fundamental to guaranteeing the trustor’s wishes will be fulfilled.
It is important to designate a successor trustee in the event of the principal trustee’s death or incapacitation. The trust instrument must establish the powers granted to the trustee to control the funds in the account and other assets held in the trust.
For example, the trust instrument must determine whether the trustee has a broad or limited scope of power to control, administer and invest the funds held in the trust account. Once the trustee is appointed, it is possible to designate the individuals chosen as beneficiaries.
Funding the Trust Account
Once the trust is properly executed, the trustor must fund the trust with the assets intended for that purpose. Considering the trust account is designated to hold the amount used to fund the trust, typical trust assets in Florida include cash or income-bearing assets (e.g., bonds, stocks, etc.).
In Florida, most banking entities will require trustors or trustees to obtain a federal tax identification number (TIN). After the preliminary requirements have been met, it is possible to create a bank account titled in the name of the trust.