From time to time, we meet clients who think they understand estate planning, but in reality, they are misinformed. In this blog series, we'll take a look at a few common misconceptions we hear and set the record straight regarding estate planning in Georgia.
Misconception #4: “Everyone needs a revocable living trust.”
Clients often call us to discuss creating a trust-based estate plan—that is, a plan that distributes assets through a Revocable Living Trust (RLT), rather than a Will. Our first response is typically: “Tell me why you think you need an RLT.” Many people are under the impression that every Georgian needs an RLT in their estate plan, but this is most often not the case.
A Revocable Living Trust is a living trust created during your lifetime which owns and manages the property placed in it. The RLT then has provisions to direct the distribution of the trust's assets after your death. The main reason an RLT is used is to avoid the probate system as much as possible. This is important in some states where probate is complicated, time consuming, and expensive.
Many Georgians who believe they must have a trust learned that from friends or relatives who live in these states where probate is a massive headache. Fortunately, the probate system in Georgia is comparatively simple and efficient, and as such an RLT is not necessary just to avoid the process. For the majority of Georgians, a Will-based plan is sufficient for their estate—not to mention it is often much more affordable than creating a trust-based plan.
Having said this, there are a few reasons that a Georgia resident might consider a trust-based plan over a will-based plan:
- Out-of-state Holdings: If someone owns real estate outside of Georgia, an RLT may be helpful to streamline the distribution of this property and avoid interstate probate complications
- Blended Families: An RLT may be beneficial in bended family situations to ensure that assets are correctly distributed to one's spouse, children, and stepchildren.
- Privacy: Because an RLT bypasses the probate process, one's trust is not a part of public record. This can be desirable if there are privacy concerns.
- Asset Protection: Distributing assets through an RLT offers a level of protection from the beneficiary's creditors, or perhaps a descendant's spouse in the case of divorce.
- Anticipated Incapacitation: If a person is expecting to experience a future illness or disability, an RLT can be a good tool to manage assets by avoiding the need for conservatorship and setting forth how the assets are to be used if such incapacitation occurs.
While we want to make it clear that for most Georgians, a Revocable Living Trust is not required, we encourage those who think they may fall into one of the above categories to reach out to Peach State Wills & Trusts to discuss their situation. We will help you determine which estate planning tools will be most beneficial to you and your loved ones.