When you studied your estate planning options, you may have looked into different types of trusts or heard about revocable and irrevocable trusts. Both can be valuable tools that serve a purpose in your estate plan. Learn more about the difference between a revocable and irrevocable trust in Georgia.
How Trusts Work
At its core, a trust is an entity that can hold money, stocks, real estate, and other types of assets. Once you transfer a piece of property to a trust, the trust becomes the legal owner of this property.
All trusts include at least three parties:
- The grantor, who creates the trust
- The trustee, who manages trust assets
- The beneficiary, who receives a benefit from the assets held in the trust
Revocable vs. Irrevocable Trusts
The main difference between a revocable and irrevocable trust in Georgia is the changeability of trust terms after the trust's setup. While you can easily amend a revocable trust at any point throughout your lifetime, irrevocable trusts are generally unalterable except through a complex legal procedure.
With revocable living trusts, you can act as the grantor, trustee, and beneficiary rolled in one and maintain full control of your assets. Upon your passing, the trust automatically becomes irrevocable. A pre-appointed successor trustee will step in and take over trust management and distribution of trust assets to your designated beneficiaries.
Irrevocable trusts require an independent trustee from the start and limit your access to and use of trust property. While this can be a drawback, irrevocable trusts are highly useful for asset protection, though in many situations people may not want to turn over control and ownership of their assets into an irrevocable trust.
The Goals of Revocable and Irrevocable Trusts
Revocable and irrevocable trusts work differently and accomplish different goals. A revocable trust can:
- Help your family avoid probate (a process that may take six months to a year, or longer, in Georgia) so assets pass directly to beneficiaries outside of the probate court process
- Simplify asset and business management after your passing
- Give you a higher level of control over asset distribution to beneficiaries
- Provide for an easier manner in managing assets in the event of your incapacitation
- Keep your personal business affairs private and outside of the court's public records
Irrevocable trusts are useful if you're looking to:
- Protect your estate from creditors, Medicaid, and other claims
- Reduce estate taxes for your heirs
- Help provide for family members with special needs in certain situations
Which Type of Trust Should You Establish?
Depending on your estate planning goals and the size of your estate, you may need a revocable trust, an irrevocable trust, or both. An experienced trust and estate attorney can help you decide which type of trust is right for you and draft a trust document that accomplishes your estate planning needs.
Working with a skilled trust attorney will also ensure that your trust terms comply with state requirements so that the trust is enforceable. Finally, your lawyer will verify that your trust fits your other estate planning documents, like a will, powers of attorney, and advance directives.
Set Up the Right Trust for Your Needs in Georgia
Now that you understand the difference between a revocable and irrevocable trust in Georgia, it's time to contact Peach State Wills & Trusts and start working on your estate plan. Call 678-551-7082 or fill out our online form to schedule a consultation. Learn more about how we can help.