Georgia Trusts Lawyers Making the Complex World of Trusts More Accessible for You
Trusts may sound like something only the ultra-wealthy would be able to utilize, but they are actually a useful tool for anyone who wants to have more control over how their assets are passed to their beneficiaries. While they are not necessary for everyone, they are helpful to consider in certain situations. If you are trying to avoid probate on your estate, have minor children or disabled people you would like to make your beneficiaries, or if you want an alternative to needing to set up conservatorship and power of attorney for your finances if you become incapacitated, a trust may be what you are looking for. Trusts are powerful but complex legal tools, so it is important to consult with an attorney who understands trusts and can walk you through the pros and cons. At Georgia Wills, Trusts, and Probate Firm, LLC, we can help you figure out which of the many types of trusts is right for your situation and draft documents to fit your needs. Call us today to set up a strategy session and see if a trust is right for you: (770) 795-4992.
How Is a Trust Defined?
There are many legal terms that are specific to trusts and it is helpful to know what those terms mean and how a trust works. The person who creates the trust, typically with help from an attorney, is known as the grantor of the trust or the trustor. A trustee is the manager of the trust who has a legal responsibility, known as a fiduciary duty, to handle the trust assets in a fiscally responsible way. The beneficiary is the person who will receive the assets from the trust in the way specified by the grantor, and these wishes are carried out by the trustee. In the most basic terms, a trust is an agreement where the grantor gives a trustee the right to hold assets for the benefit of a beneficiary or beneficiaries.
In the case of a living trust and some other trusts, once the trust is set up it must be funded. A living trust that isn’t funded will not be useful to your beneficiaries. Funding refers to transferring legal ownership of your assets from yourself to the trust. For example, if you want to put your home into the trust, you need to legally transfer the name of the owner on the deed from yourself to the trust. You will have to do the same with vehicles, bank accounts, and other assets to have them be covered by the trust.
What Are the Different Categories of Trusts?
When speaking in general terms of the law, there are two categories of trusts: revocable and irrevocable. The difference between these is that a revocable trust can be revoked, so you can make changes to it or even dissolve it if you want. An irrevocable trust is binding and cannot be revoked or changed in any way. The majority of trusts used in estate planning are revocable during the trustee’s lifetime, and they then become irrevocable once the trustee passes away.
In regards to estate planning, there are many different types of trusts which can be used. Some are more generic, while others are purpose-specific and can be created to meet particular goals. These are some common examples of trusts used in estate planning:
- Living trusts: This is the most common type of trust used in estate planning. A living trust is created while you are still alive, hence the name. People use living trusts because they protect the privacy of their heirs due to the fact their assets are not made part of the public record as they would be with a will. It is also one way of avoiding probate. However, this only works if all of the estate’s assets are in the trust.
- Testamentary trusts: A testamentary trust is set up within your will and is then created when your estate goes through the probate process, which means less work during your lifetime. Often this is used if the testator wants to leave money to a person who is unable to manage their finances, such as minor children or incapacitated adults. This is because they can also put conditions on the inheritance within the will, for example requiring the heir to be a certain age before they can use the funds or stating the funds can only be used for certain purposes.
- Special needs trusts: Typically, the beneficiary of this type of trust is a minor child or other people who are mentally handicapped or otherwise unable to manage their own finances. It allows a parent or other adult to provide funds for the care of the handicapped person without those funds affecting their ability to receive Medicaid, SSI, and other benefits they may need.
- Marital trusts: Spouses may wish to create this kind of trust to ensure that their husband or wife retains all of their marital assets. The upside of this is that no federal estate taxes need to be paid until both spouses have passed away and the trust passes on to their heirs.
- Charitable trusts: If you wish to leave money to a charitable foundation, creating a charitable trust can help you maximize your donations. This is an irrevocable trust and can be set up in a couple of different ways. Either one will ensure that your preferred charity receives your funding with the added benefit of lowering or avoiding estate taxes for the donation.
What Are the Benefits of Creating a Living Trust?
A revocable living trust is the most popular type of trust used for estate planning, and for good reason. It has the flexibility to adapt to many different estate situations, depending on how it is written. Usually, you will make yourself the trustee or co-trustee during your lifetime, which allows you to move funds into and out of the trust as you wish. However, one of the advantages of a living trust is that if you set up successor trustees, they can take over management of the trust if you become incapacitated and can no longer make financial choices. This can remove the necessity of conservatorship or setting up a power of attorney at the end of your life, saving you money on court costs and reducing the amount of stress on your family.
One of the main reasons people use living trusts is to avoid probate. If all of your assets are within the trust then probate is generally unnecessary, which is especially helpful if you own property in multiple states and your estate would otherwise need to go through probate more than once. Avoiding the probate process is beneficial in many ways. It reduces court fees and hassle for your family and gives them time to mourn the passing of their loved ones. They will also have access to their share of the estate much faster. It gives them privacy as well because trust assets are not made public record the way that estate assets that go through probate are. This privacy can also be helpful in other ways because it makes it harder for creditors and others to make claims to your estate since they don’t have to be notified.
Another benefit of a living trust is that it can protect assets granted to your heirs from creditors. If you know that a beneficiary may have issues with creditors, your trust can be written in such a way that those creditors will be unable to come after money from the trust. If you want to ensure that you get the full benefits of a trust it is important to consult with a Georgian estate planning attorney who has experience writing living trusts and understands trust administration so they can guide you through the process.
Who Should You Select as a Trustee?
The trustee is the person or entity who is responsible for the management of the trust and all of the trust assets. This legal title comes with a large amount of responsibility. The trustee has a fiduciary duty to properly manage all trust assets and to distribute those assets to beneficiaries according to the wishes of the grantor. Their specific duties will depend on the type of trust and what the nature of the agreement is for the trust, but they will need to be capable of filing taxes and performing any other needed duties in regard to the trust. Needless to say, it is very important to choose a trustworthy trustee who you can count on to fulfill their fiduciary duty.
Typically for a living trust, the grantor will be the trustee during their lifetime, but they will still need to name a successor trustee to manage it after the grantor dies. Many times this is someone close to the grantor, such as a spouse, sibling, child, or business partner. It can also be an entity like a bank or a law firm. It is possible to name co-trustees and sometimes this can be helpful because you can name both a trusted person and an entity as trustees and have more knowledge and oversight for the handling of the trust. You can always have conditions written into the trust, such as requiring the trustee of a living trust (if it’s not yourself) to consult you before selling any of the trust assets.
One thing to consider before naming a trustee is whether they might have a conflict of interest in the assets held by the trust. For example, naming a business partner as the trustee for a trust that contains your joint business may lead to some difficult situations if they have different ideas about the future of the company than your beneficiaries do. Naming your second spouse as the trustee when children from a previous marriage are beneficiaries can also lead to potential disagreements. One of the reasons for creating a trust is to make the transfer of assets easy, so anything that could lead to trust litigation should be avoided at all costs. One way to head off these issues is to choose a professional trustee. These individuals or entities can be a good choice because they are third parties who have knowledge of trust administration and are not emotionally tied to the situation, so their only focus is to protect assets and ensure that the terms of the trust agreement are met.
Do You Need a Will After You’ve Created a Living Trust?
After you’ve consulted an attorney and set up one or more trusts to meet your estate planning goals, why would you need a will? It may seem like a trust would eliminate the need for a will, but it is actually still recommended that you create one in addition to the trust. This will is typically called a “pour-over” will, and it ties up any loose ends that may be left after you pass away. For example, if something sudden happens to you, you may have property or other assets that have not yet been transferred to your trust. A pour-over will specify that any of your remaining assets should be transferred to the trust upon your death. This is a backup solution that allows your family to still avoid probate for your estate. Since one of the main goals of estate planning is to protect assets, think of a pour-over will as another layer of protection for your estate.
Should You Consult a Lawyer if You’re Considering a Trust as Part of Your Estate Plan?
Trusts are a very useful but also very complicated legal tool. There are wide varieties of trusts and they can be further customized with specific language to meet different goals. You need to work with an attorney with knowledge of trusts and trust administration to ensure that you are following the law and getting the most benefit from your trust. A trust can be a wonderful way to protect assets for minor children or disabled loved ones and can provide privacy to your family instead of having them go through the long, public process of probate. But it may not be the right fit for everyone’s circumstances, so it is important to consult with an attorney who understands your needs and can assist both you and your trustees with the process if you decide to create a trust.
The last thing you want after carefully setting up a trust is to have trust litigation issues dogging your beneficiaries. Finding a law firm that will not only help you manage your trust during your lifetime but will also help your trustees fulfill their fiduciary duty to the trust and your beneficiaries will ensure the best outcome for your estate and your loved ones. Our attorneys at Georgia Wills, Trusts, and Probate Firm, LLC can help you determine if trusts are the best way to protect assets and provide for your family members. We can provide you with information on living trusts, testamentary trusts, special needs trusts, and more and can advise you on how they could impact the amount your beneficiaries pay in estate taxes and fees. Contact us at (770) 795-4992 to learn more about trusts and whether they are right for you.