Lesser-Known Types of Irrevocable Trusts in St. Petersburg

Irrevocable trusts in St. Petersburg are immensely popular, and people appreciate the flexibility of these estate planning tools. But while irrevocable trusts share many common features, there are many different types to consider. Consider discussing your options with an estate planning lawyer in St. Petersburg to ensure you choose the right irrevocable trust.

The Florida Irrevocable Grantor Homestead Trust (FIGHT)

According to the Florida Bar, the Florida Irrevocable Grantor Homestead Trust (FIGHT) allows you to “have your cake and eat it too.” In this context, the “cake” is the Florida homestead exemption, which is one of the most powerful financial tools of any household in the Sunshine State.

Using an irrevocable trust, you can provide a “lifetime conveyance” of the homestead to the trustee. This is also known as a life estate. With this approach, you will benefit from the homestead property tax exemptions in Florida, which are set to increase dramatically as of this writing.

The Florida homestead exemption also offers exceptional creditor protection. Under normal circumstances, an irrevocable trust runs the risk of eliminating homestead exemptions. Finally, your heirs can inherit the property easily while enjoying the “step-up in basis” and avoiding probate.

The Intentionally Defective Grantor Trust (IDGT)

Intentionally defective grantor trusts (IDGTs) are popular among families with significant investment portfolios. This type of irrevocable trust allows a grantor to shift their investments out of their personal estate while protecting their heirs from gift or federal estate taxes. The grantor is responsible for paying income taxes for the trust, but these burdens may be relatively low because Florida does not enforce income taxes.

As an irrevocable trust, an IDGT protects assets from threats like lawsuits and creditors. It also allows the grantor to give lucrative investments to their beneficiaries during their lifetime with minimal financial burdens. By paying federal income tax for the trust, the grantor can effectively make tax-free gifts to their beneficiaries without worrying about exceeding lifetime or annual gift tax exemptions. As a grantor trust, an IDGT also offers more control than other types of irrevocable trusts.

The Offshore Asset Protection Trust (OAPT)

Because Florida does not allow Domestic Asset Protection Trusts (DAPTs), families often consider Offshore Asset Protection Trusts (OAPTs) instead. These self-settled trusts allow grantors to act as their own beneficiaries. In other words, you can receive distributions from the trust assets while shielding those assets from any threats from your personal side (taxes, lawsuits, creditors, etc.).

Can a St. Petersburg Estate Planning Lawyer Help Me? 

If you’re curious about the various types of irrevocable trusts in St. Petersburg, a conversation with an estate planning lawyer is an obvious next step. During your first consultation, you can discuss your unique family and financial situation before selecting the most appropriate estate planning strategies. Continue this dialogue by contacting Drude Tomori Law at 727-300-8900 today. We serve residents of St. Petersburg, Lakewood Ranch, Bradenton, and Sarasota.

Sources:

 floridabar.org/the-florida-bar-journal/florida-irrevocable-grantor-homestead-trust-having-your-cake-and-eating-it-too-first-course/

floridabar.org/the-florida-bar-journal/estate-planning-during-turbulent-times/