What Are The Common Mistakes To Avoid When Setting Up A Living Trust In Georgia?

At Peach State Wills & Trusts, we understand that setting up a living trust can seem like a daunting task. There are numerous details to consider, and making mistakes can have significant consequences for your estate and beneficiaries. To help you undergo this process smoothly, we've identified some common pitfalls to avoid when establishing a living trust in Georgia.

Failing to Fund the Trust

One of the most critical steps in setting up a living trust is funding it. This means transferring ownership of your assets into the trust. Many people create a trust but forget to transfer their assets, which essentially renders the trust useless. Here are some steps to properly fund your trust:

• Transfer Real Estate: Deed your real estate properties into the trust.

• Update Financial Accounts: Change the ownership of your bank accounts, stocks, bonds, and other financial assets (other than qualified retirement plans) to the trust.

• Personal Property: Assign valuable personal property, such as jewelry, art, and collectibles, to the trust.

• Business Holdings: It may be appropriate to put your ownership of a small business (corporation or LLC) in the trust as well.  

Not Updating Beneficiary Designations

Another common mistake is neglecting to update beneficiary designations on life insurance policies, retirement accounts, and other assets. If your beneficiary designations do not match your trust provisions, it can lead to confusion and legal complications. Tips For Updating Beneficiaries:

• Consistent Designations: Ensure that the beneficiaries on your accounts match those listed in your living trust if you intend them to be treated the same way.

• Regular Reviews: Periodically review and update your beneficiary designations, especially after major life events like marriage, divorce, or the birth of a child.

Choosing the Wrong Trustee

Selecting the right trustee is crucial for the effective management of your living trust. A trustee should be someone you trust implicitly, capable of managing financial matters, and who understands your wishes. It's important to choose someone reliable and honest, ensuring they have the necessary financial skills and verifying that they are both willing and able to take on the responsibility.

Overlooking State-Specific Requirements

Each state has its own laws and requirements for establishing a living trust, and it's essential to ensure your trust complies with Georgia's specific legal requirements to avoid potential issues down the line. Make sure your trust document adheres to Georgia's legal standards and understand how Georgia property laws affect your trust, especially regarding real estate.

Neglecting to Name a Successor Trustee

It's vital to name a successor trustee who will take over the management of your trust if the original trustee becomes unable to serve. Failing to appoint a successor trustee can leave your trust without guidance when it's needed the most. How to choose a successor trustee:

• Trust and Capability: Similar to selecting the initial trustee, ensure the successor is trustworthy and capable.

• Clear Instructions: Provide clear instructions and guidelines for the successor trustee to follow.

Ignoring the Impact of Taxes

While living trusts can offer certain tax benefits, they don't eliminate all tax liabilities. It's important to understand the tax implications of your trust and plan accordingly to minimize your estate's tax burden. To do this effectively, work with an estate planning attorney or tax advisor to understand potential tax liabilities and consider the impact of both state and federal estate taxes on your trust.

Failing to Keep the Trust Updated

Life circumstances change, and your living trust should reflect those changes. Failing to update your trust can lead to unintended consequences, such as leaving assets to someone who is no longer part of your life or failing to include new beneficiaries. To avoid these issues, update your trust after significant events like marriage, divorce, birth, or death in the family, and conduct regular reviews to ensure it still aligns with your wishes and current laws.

Not Seeking Professional Guidance

Setting up a living trust involves many complex legal and financial considerations. Attempting to do it without professional assistance can lead to errors that may cost your beneficiaries time and money. Benefits of professional assistance:

• Professional Advice: Gain insights and guidance from experienced estate planning attorneys.

• Customized Solutions: Ensure your trust is tailored to your specific needs and goals.

• Compliance Assurance: Verify that your trust complies with all relevant laws and regulations.

Misunderstanding the Role of a Living Trust

A living trust is a powerful tool for estate planning, but it's not a one-size-fits-all solution. It's essential to understand what a living trust can and cannot do to set realistic expectations and avoid disappointment. For instance, a living trust helps avoid probate for assets held within the trust and allows for the management of your assets if you become incapacitated, but contrary to common belief, does not provide significant tax benefits.

Contact Us for Professional Guidance

Setting up a living trust in Georgia can be complex, but avoiding these common mistakes can help ensure your trust meets your needs and protects your assets. At Peach State Wills & Trusts, we're here to guide you through the process and help you create a comprehensive estate plan.

Contact Peach State Wills & Trusts at 678-344-5342 or online to learn how to plan for your future in Georgia today. If you have any questions about estate planning in Georgia, you can download our free guide here with no strings attached. We're committed to providing friendly, professional, and approachable legal services to help you with all your estate planning needs.