Trust-based wealth management is one of the most powerful tools available to families who want to protect their assets, care for their loved ones, and leave a legacy. Yet for many Winter Garden and Clermont residents, the questions surrounding trusts can feel complex and overwhelming. They shouldn’t be. Here are the ten questions we hear most often, with simple and honest answers.
1. What is the purpose of setting up a trust?
A trust is a legal arrangement that holds and manages assets on behalf of one or more beneficiaries, according to instructions you set in advance. The person who creates the trust is called the grantor, and the person or institution responsible for managing it is the trustee.
The primary purpose of a trust is to provide control, protection, and continuity for your assets. It allows you to decide how and when your assets are distributed, whether that’s during your lifetime, after your death, or across multiple generations.
For many families, a trust is a core part of estate planning. It can help:
- Provide financial support to loved ones over time
- Manage assets for beneficiaries who may not be ready to handle them directly
- Maintain continuity if you become incapacitated
- Reduce delays and complications in transferring assets
Depending on how it is structured, a trust can also allow for flexibility. A trustee may be able to distribute income or principal based on specific needs or circumstances, helping your plan adapt as life changes.
2. What is a living trust? Are they popular?
A living trust, as opposed to a testamentary trust which is created through a will and activates at death, goes into operation during your lifetime. Most living trusts are revocable, meaning you retain full control while you’re alive and well. They’ve become widely popular for four compelling reasons:
- Sound asset management. Your trustee provides professional oversight of your portfolio, aligned with your vision and values.
- Protection in the event of incapacity. If illness or incapacity strikes, trust management continues without interruption, protecting you and your family during vulnerable moments.
- Probate avoidance. Unlike a will, a living trust typically bypasses the probate process entirely, meaning faster access to assets for your loved ones, without court involvement.
- Financial privacy. The terms of a will become public record during probate. A trust keeps your financial affairs private.
3. How is a trust different from other investment accounts?
A trust has an independent legal existence that makes it uniquely durable. Unlike a standard investment or brokerage account, a trust can survive the incapacity or death of its creator. The successor trustee steps into the shoes of the person who established the trust and continues managing it according to its stated purpose, regardless of what happens in the lives of those involved.
This legal continuity is one of the most important features that distinguishes a trust from virtually every other financial instrument available.
4. How much income does a trust generate?
Setting up a trust doesn’t inherently change the amount of income your investment portfolio produces. In a traditional trust structure, “income” refers to collected interest and dividend payments, so as rates and yields rise and fall, income fluctuates accordingly. Growth in asset values, such as appreciation in stock prices, typically accrues for the beneficiaries.
That said, many trusts today take alternative approaches, defining income as a fixed percentage of total trust assets, a set dollar amount each year, or a figure adjusted annually for inflation. Each approach has trade-offs worth discussing with a trust professional.
If your trust uses a fixed percentage distribution and actual income falls short, the trustee may need to draw from the principal to make up the difference. This is why the structure you choose at the outset matters so much.
5. Does a living trust eliminate the need for a will?
As a practical matter, no — and this is one of the most common misconceptions we encounter. Even with a robust living trust in place, you still need a will to handle assets that weren’t placed in the trust and to tie up any loose ends in your estate.
There’s also a practical advantage to having even a modest probate estate: once probate proceedings give potential creditors their opportunity to make claims, later claims against the estate are generally barred. A will and a trust work best as complements, not substitutes.
6. Will a trust protect assets from creditors?
In most cases, a revocable living trust does not protect your own assets from creditors. Because you retain control of the assets during your lifetime, those assets are generally still considered yours from a legal standpoint.
However, trusts can be structured to protect assets for your beneficiaries. For example, assets held in a properly designed trust may be protected from a beneficiary’s creditors, lawsuits, or divorce claims, depending on how distributions are structured.
This is often used in estate planning when a parent or grandparent wants to pass down wealth while helping safeguard it for future generations.
Asset protection is a complex area of law, and the level of protection depends heavily on how the trust is written and when it is established. It’s important to work with experienced professionals to ensure the structure aligns with your goals and applicable laws.
7. When I set up a living trust, do I lose control of my assets?
Not at all, provided your trust is revocable, which most living trusts are. As the grantor of a revocable living trust, you remain firmly in control. You can change successor beneficiaries, add or withdraw assets, and make any other adjustments you wish throughout your lifetime.
The trust only becomes truly “locked in” if you choose to make it irrevocable, which is done for specific planning purposes and is a decision made deliberately, with full awareness of the implications.
8. Can I be my own trustee?
Yes, you can serve as your own trustee or appoint a trusted family member. But while it’s legally permissible, it’s generally not the course we recommend. Here’s why having a professional trustee like our team serves you better:
- Expert administration. All the complex administrative responsibilities of trust management are handled by experienced professionals.
- Professional management. You gain access to professional investment oversight of your assets.
- Family continuity. Your loved ones receive consistent financial support both during your lifetime and beyond.
- Incapacity protection. There is always someone ready to step in and manage your financial affairs if illness or incapacity strikes, without burdening family members during an already difficult time.
9. Is trust service expensive?
When you choose First National Bank of Mount Dora as your trustee, our annual fees compare very favorably with those of other investment managers, including most brokerage firms.
The value, however, extends well beyond cost. You’re not just paying for portfolio management — you’re paying for continuity, protection, professional expertise, and peace of mind that your wishes will be honored and your family cared for, no matter what the future holds.
As one of our clients put it recently, “Do you know, I really feel like I’m flying first class for the price of coach!”
10. How can I learn more about trusts?
The best next step is a conversation. Our First Wealth & Trust team will take the time to understand your specific situation and walk you through your options with no pressure and no jargon. Call us at 352-385-2121, or visit the First Wealth & Trust page for more information.
Trust and Investment Services are not FDIC insured, not deposits of the Bank, not guaranteed by the Bank, not insured by any government agency, and may lose value.