Trusts have several advantages that make them popular choices in estate planning. But before creating and funding a trust, it’s essential to understand the disadvantages to make a fully informed decision for your estate.
Initial Cost of a Trust
Establishing a trust is more expensive initially than creating a Will or doing nothing. A trust based plan involves planning for all three time periods, ie., when you are healthy, when you become incapacitated, and when you die. A will based estate plan only takes effect when you die. A do nothing plan only take effect when the court directs at your incapacity or death.
If you have a will, your estate will need to be probated when you die. If you do nothing, there will also be a probate when you die, the difference is the State of Georgia has written a will for you. If you have a trust, and have properly titled your assets to your trust, there will not be a probate when you die.
For a post death matter, in Georgia the executor is entitled to charge a fee equal to 5% of the gross estate to probate a will or administer an estate that does not have a will. A trustee charges a fee of 1% to administer the trust.
Takes Time and Effort to Transfer Assets
It does not make sense to set up a trust and not transfer your assets to the trust. Assets that are not titled to your trust will need to be probated. Assets that are in your trust avoid probate. It takes time and effort to re-titling the assets to the trust and making sure the beneficiary designations of all retirement plans and insurance polices are coordinated with the trust. Not all attorneys have experience making these transfers or coaching you through this process so be sure to talk to an experienced estate planning attorney for this critical step if you want the reward of lower administration expenses when you become incapacitated or die.
Let Me Advise You
If you or someone you know needs help navigating the world of estate planning, particularly naming the correct beneficiary on a retirement plan or life insurance policy, please call me at 770-889-3911 for help from an experienced estate planning and elder law attorney.