WHAT IS A TRUST?
A living trust, also called a revocable living trust (RLT), is a trust that you establish during your lifetime to direct the distribution of your assets after your death. Note that a living trust is different than a testamentary trust, which a part of your Will and only created after your death.
HOW DOES A TRUST-BASED ESTATE PLAN WORK?
A trust-based estate plan consists of an RLT, a Will, a power of attorney, and an Advanced Directive for Healthcare. The trust is created during your life and it is funded. Funded means that you move your assets into the trust so that the trust owns the assets instead of you, but you still control the assets as a trustee, and use them however you desire. Because the trust owns the assets, when you pass away, the assets in the trust would not need to go through the probate process to be transferred to your loved ones.
For assets that may not have been moved over into the trust, you have a Will, commonly called a ‘pour-over' Will, that essentially states that any assets held outside of the trust will be ‘poured over' into the trust after your death. Then, the trust will control how your assets are held, used, and distributed. The trust-based plan avoids the probate process with respect to distribution of your assets, apart from assets that have to be transferred into the trust through your pour-over Will.
DO I NEED A TRUST?
The answer is maybe, maybe not. Not anyone “needs” a trust in the sense that you absolutely have to have it. Based upon our observation, more folks don't have a trust in Georgia that do have one, but, based on wishes of some people, a trust is a needed tool to ensure their goals are carried out.
SO, WHY MIGHT I WANT TO USE A TRUST?
A trust may be a better tool for you if any of these situations resonate with your goals:
- Time Concerns: If you want to ensure that assets are available for your loved ones as soon as possible after your death, a trust may be the better option. While the probate process in Georgia is not necessarily burdensome or typically expensive, it is time-consuming. A probate case in Georgia routinely takes at least six months before assets are transferred from the estate of a decedent to his or her heirs or beneficiaries, regardless of whether you have a will. Using a trust can help avoid such a delay and may get your assets into the hands and control of your loved ones much faster. For this reason alone, many people may view a trust as a better option for their estate planning.
- Blended families: A trust can be a good option in blended family situations. A trust allows the trust-maker to ensure that a spouse is provided for after the trust-maker's death and assets are then left to his or her children from a prior marriage.
- Privacy concerns: Some people want to minimize the probate court's involvement in their estate and maintain a certain level of privacy with regards to the distribution of their assets. A trust allows for this, as the trust generally remains private and avoids the probate process.
- Asset protection: A trust can help shield your child's inherited assets from their creditors, or perhaps from his or her spouse in the case of a divorce.
- Planning for future incapacity: A trust can also be beneficial when anticipating future incapacitation, illness, or disability of the trust-maker. The trust would bypass the need for conservatorship and allow the trust-maker to grant the Successor Trustee broad powers to carry out his or her wishes.
- Out-of-state property: If you own property in other states, a trust is a very helpful tool for you so that an ancillary probate proceeding in another state can be avoided.
HOW DO I KNOW IF A TRUST IS RIGHT FOR ME?
At Peach State Wills and Trusts, we want to help you build the plan you need and avoid unnecessary documents—and costs. We will discuss your situation, goals, and concerns, and help you decide if a trust-based plan is best for you and your family, after evaluating your unique situation. A trust-based plan is not appropriate for everyone, but it is a superior planning tool that is the right choice for some. If you find that a trust-based plan is not right for you, then alternatively you may want to consider doing a will.