dollar bills pile

You may want your loved ones to receive as much financial support as possible when the time comes that you are, unfortunately, no longer around to provide for them. This reason alone may kickstart your desire to become the grantor of a trust and name your loved ones as its beneficiaries. But while you may want to fund your trust with the maximum amount of money you can realistically afford, you must still be wise with how much you actually transfer over to this estate planning tool. Read on to discover how much money you should place in your trust and how a seasoned Broward County trust lawyer at The Probate Lawyers can help you initiate this transfer.

How much money should I transfer into my trust?

There is not necessarily a “cap” on how much money you are allowed to transfer into your trust. However, there is an enforced limit when it comes to the annual gift tax exemption. That is, one of the primary advantages of a trust is that it allows you to “gift” your designated beneficiaries with a certain amount of money each year without it being subject to the usual gift taxes and estate taxes. While Florida may not impose gift or estate taxes, your estate may trigger federal taxes if it is significant enough. That is, federal taxes kick in for estates valued greater than $13.61 million and may reach as high as 40 percent.

Also worth mentioning is that Florida does not have state-specific laws surrounding the annual gift tax exemption. However, federal law holds that a grantor may only make a qualifying transfer to each beneficiary of up to $18,000 per year before reaching the accepted limit. Of note, this limit was slightly raised from $17,000 in 2023. Overall, this is all to say that you must keep the annual gift tax exemption in mind when funding your trust.

How do I know whether to establish a trust or a will?

The annual gift tax exemption is just one of the many benefits of a trust. It is commonly preferred over a will, which is an estate planning document that simply expresses your wishes for asset distribution upon your unfortunate passing. Without further ado, below are additional reasons as to why you may establish a trust over a will:

  • Your trust may be quick to administer as it does not require court approval in the lengthy probate process.
  • Your trust may remain private in its administration and away from the public probate process.
  • Your trust may grant you wealth continuity as it may become effective while you are still alive.
  • Your trust may grant you increased management and protection over your assets during your lifetime.

In conclusion, you require the services of a competent Broward County estate lawyer when placing funds in your trust. So please schedule an initial consultation with us at The Probate Lawyers today.