It is not uncommon as you approach the estate planning process to have questions about types of testamentary trusts, the benefit of a testamentary trust versus a living trust, and whether or not you should use testamentary trust forms. The support of an experienced Georgia estate planning attorney can go a long way in helping you understand the role of testamentary trusts and in deciding whether or not this is appropriate for your estate plan.
Testamentary Trusts Versus Living Trusts
Testamentary trusts are those that are established under a person’s last will and therefore, do not go into effect until the creator passes away. The trust then only becomes funded after death.
This is a non-grantor form of trust that does involve probate court and is governed by the Georgia decedent’s will. This means that after the estate has been filed for probate administration, it becomes public knowledge that the testamentary trust in Georgia did exist. Trustees who have been appointed to a Georgia testamentary trust have official responsibilities to file annual account statements with the local probate court and could be found liable in the event that they fail to comply with these reporting requirements. A testamentary trust in Georgia is just one kind of estate planning tool.
Another type of Georgia trust is known as a living trust or an inter-vivos trust. These are created and funded during the creator’s lifetime which means that it functions while the grantor is still alive and is also not governed by a will. A primary reason to go with a Georgia living trust rather than a testamentary trust is because these stay private and do not enter the domain of the probate court. The grantor can decide whether or not to fund this living trust before or after the grantor’s death and this type of trust could be irrevocable or revocable. A great deal of property could be excluded from estate taxes when a living trust has been set up properly.
Revocable Living Trust
A revocable living trust is one in which the trustee, the trust maker and the recipient of assets are usually on entity or person. The trust agreement might additionally list other beneficiaries who are eligible to inherit assets inside the trust after the grantor passes away. Revocable trusts are often created to help plan for the possibility of a mental disability in the future. The trust grantor can name another person to serve as their successor trustee and this individual would then be responsible for taking over the trust in the event that the original grantor becomes mentally disabled.
Irrevocable Living Trusts in Georgia
Under a Georgia irrevocable living trust, the grantor or trust maker cannot also serve as the trustee. Irrevocable trusts are often used for the purpose of transferring assets and wealth to the next generation. This can reduce the trust maker’s overall estate value which is beneficial for tax purposes. One major challenge with a Georgia irrevocable trust is that as the name suggests, once an asset or property is placed into it, it cannot be removed. Furthermore, a revocable trust can be dissolved at any point in time based on the grantor’s wishes, whereas as irrevocable trusts can last forever.
What Is More Appropriate- A Will or a Trust?
For all people, a last will and trust enables you to name a guardian for your minor children. This is why many young families turn to the creation of a will as their primary estate planning document. Those families that have adult or teen children, however, might benefit from a more advanced Georgia estate plan and one of the most common vehicles for accomplishing that goal is a trust. Trusts offer many different types of benefits to provide for your loved ones and to protect your estate. Avoiding the probate process is one of the most common reasons that Georgia estate creators choose to use a trust rather than just a will.
Probate can take anywhere from several months to a few years to complete and there is also the potential for courthouse delays, delays at paperwork processing, attorney delays, delays with financial institutions and difficulties in identifying all assets and potential creditors. This is one of the leading reasons why you should at least schedule a consultation with an Atlanta estate planning attorney to discuss a trust. Some of the most common benefits of establishing a Georgia trust include:
- Providing for stepchildren.
- Minimizing estate taxes.
- Keeping your estate settlement private.
- Reducing court fees and taxes.
- Preventing a daughter-in-law or son-in-law from squandering an inheritance intended for your child.
- Gifting biological children with different amounts.
- Dictating asset distribution terms.
- Protecting assets from lawsuits and creditors.
- Preventing nursing home poverty.
To discuss more of your needs, schedule a consultation with a trusted estate planning lawyer in Georgia today. If you need support drafting a testamentary trust in Georgia or want to discuss other options, it’s helpful to have a lawyer’s support to do it.