Trust Creation in Florida

Under Florida law, creating a valid trust requires adherence to several key formalities, beginning with the settlor having the same mental capacity as required to make a Will. Specifically, the settlor, or grantor, must be at least 18 years old and possess a sound mind, generally meaning they understand the nature and extent of their property and their relation to their beneficiaries. The trust instrument itself must be in writing to dispose of property after death. As mandated by Florida Statutes §736.0403, the testamentary aspects of a revocable trust must be executed with the same formalities as a Will. This means the settlor must sign the document in the presence of two subscribing witnesses, who must also sign in the presence of the settlor and each other. Furthermore, the trust must have a lawful purpose, be in good faith, and clearly identify the trust property and beneficiaries. Although not legally required, notarization is standard practice and highly recommended to provide an extra layer of verification. Finally, for the Trust to be effective in avoiding probate, the assets must be formally transferred, or “funded,” into the Trust.

The primary purpose of a Florida Revocable Living Trust is to facilitate the efficient management and transfer of assets outside of the state’s probate process. Because assets are titled in the name of the Trust, they bypass the often time-consuming and costly probate court administration after the settlor’s death. This mechanism ensures that the distribution of property to beneficiaries is typically faster and more private than with a Will. A significant secondary purpose is to provide for seamless asset management should the settlor become incapacitated. A named successor trustee can immediately step in to manage the Trust assets without the need for a public, court-supervised guardianship proceeding. The trust is “revocable” by the settlor during their lifetime, allowing for complete control, amendment, or revocation as per Florida Statutes §736.0602. This flexibility ensures the estate plan can be fully adapted as the settlor’s life or financial circumstances change. For Floridians owning real estate in multiple states, a Revocable Living Trust is particularly valuable, as it avoids the requirement for ancillary probate in those other jurisdictions. Finally, the Trust document remains a private agreement, keeping the details of the estate and its distribution confidential, unlike a Will which becomes a public record upon probate.

Almost all types of assets can be legally transferred into a Florida Revocable Living Trust to avoid probate. This includes all forms of real property, such as your home and vacation properties, by executing and recording a new deed with specific trust language. Bank accounts, brokerage accounts, and other investment assets are commonly funded into the trust by retitling the ownership from your individual name to the name of the trustee. Additionally, tangible personal property, like jewelry, artwork, or vehicles, can be assigned to the trust through a general assignment document. Critically, Florida homestead property can be placed into the trust while preserving the vital creditor protection and tax exemptions, provided the trust grants the settlor a “present possessory interest for life” under Florida Statute §196.041(2). However, certain assets, primarily retirement accounts like IRAs and 401(k)s, generally cannot be owned by the trust, but the trust can be named as the primary or contingent beneficiary. Life insurance policies may also name the trust as the beneficiary to consolidate the proceeds and distribute them according to the trust’s terms. Proper funding, which involves formally changing the title of each asset, is a non-negotiable step to ensure the trust functions as intended under current Florida law.

In Florida, the legal duties of a Trustee are comprehensively governed by the Florida Trust Code, Chapter 736 of the Florida Statutes. The primary and most fundamental duty is the Duty of Loyalty, which mandates the Trustee administer the trust solely in the interest of the beneficiaries, strictly prohibiting self-dealing. The Trustee must also act with prudent administration, managing the trust assets as a prudent person would by exercising reasonable care, skill, and caution. Where multiple beneficiaries exist, the Trustee owes a Duty of Impartiality, requiring fair and even-handed treatment of all beneficiaries, regardless of their interests. A Trustee must take reasonable steps to take control of and protect the trust property and keep meticulous records of all trust transactions. The Duty to Inform and Account requires the Trustee to keep qualified beneficiaries reasonably informed of the trust administration and provide a full trust accounting at least annually for irrevocable trusts. This accounting must detail all receipts, disbursements, and asset transactions during the reporting period. Lastly, the Trustee must administer the trust in good faith and strictly in accordance with the terms and purposes outlined in the trust document.