A living trust is a legal arrangement in which someone places their assets into a trust but still has access to them and continues to use them until they die. At the time of death, the assets in the trust are then passed to the beneficiaries named in the trust. This gives the person who created the trust the ability to control the trust and the assets it contains before and after their death.
What Are the Benefits of a Living Trust?
There are several, including the aforementioned ability to retain control of the trust’s assets. In a living trust, someone can specify when and how much of the assets are distributed after their death. For example, suppose some beneficiaries might be minors at the time of the trust owner’s death. In that case, they can arrange to have assets held back until those beneficiaries are older and potentially more responsible.
Trusts also help avoid probate court, which can be costly. Probate is also a public process, so when a will goes through probate, it becomes part of the public record. Trusts remain private.
What Are the Disadvantages of a Living Trust?
Some things aren’t part of a trust, such as guardianship of minor children. That can be done only through a will. If someone with a trust but no will dies and leaves minor children orphaned, the courts will determine guardianship.
While Georgia doesn’t have an estate tax, living trusts valued at more than $12m million may face federal estate taxes. There are legal means within trust planning to avoid that, so in that circumstance, consulting a lawyer experienced in estate planning is recommended.
What Kinds of Living Trusts Are Available in Georgia?
- Individual trust. An individual trust contains assets owned only by the trust’s creator.
- Shared trust. This type of trust has co-owned assets, often by spouses or partners. If the spouses or partners want to leave assets to each other when one of them dies, a shared trust is usually the preferable route. That’s because, in a shared trust, the assets stay in the shared trust for the other person when one person dies. With individual trusts, the assets would have to be transferred out of the individual trust to the beneficiary and then into that person’s individual trust (if one exists, or one may be created).
Let Me Advise You
If you or someone you know wants to investigate setting up a living trust, call me at 770-285-5493 to work with an experienced estate planning attorney.