What is a grantor trust?
A grantor trust is an informal type of trust in which the grantor, or creator of the trust, continues to own the assets that they transferred to it. Under Florida inheritance law, a grantor trust is a trust established specifically for purposes of avoiding or reducing estate taxes. This type of trust allows the grantor to retain control of the assets and income generated by the trust, rather than having it distributed to beneficiaries upon their death. Typically, the grantor will transfer their assets into the trust, which will then be managed by a trustee of their choosing. This trustee will be responsible for administering the trust according to the grantor’s wishes and distributing funds to beneficiaries upon the grantor’s death. Once the trust is set up, the grantor will no longer have ownership of the assets. Any income generated by the trust will be taxed to the grantor. In addition to reducing estate taxes, a grantor trust can also be used to protect assets from creditors or other legal claims. This is because assets held in the trust will no longer be part of the grantor’s estate, and are thus not subject to their debts or other liabilities. Overall, a grantor trust is a useful tool for avoiding or reducing estate taxes, as well as protecting assets from creditors or other legal claims, in accordance with Florida inheritance law.
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