How Is A Trust Defined In Georgia?

A trust is a legal setup where one party, the Trustee, holds an asset for the benefit of another party, the Beneficiary. The asset is placed in the trust by the Grantor (also called a Settlor).

What Are the Benefits That a Trust Offers?

A trust allows someone to control their wealth and estate precisely; by putting assets in a trust the Grantor ensures that they are governed by the terms of the trust, put together by the Grantor and their attorney. The trust can contain very specific language about what should happen to the property during the Grantor’s lifetime and what should happen to the property should the Grantor die or become disabled. This allows the Grantor to manage complicated situations like having a blended family. A trust can be setup that takes care of a second spouse and then upon the death of that spouse, distributes to the children of a prior relationship. The Grantor can also make sure that their children do not receive assets from the trust until they reached a certain age or have met certain conditions.

The Grantor can use a trust to protect their assets from creditors or other individuals who might have a claim to the property if it was held outside of the trust.

Finally, the Grantor can their family the time, expense, potential conflict of probate, which is a public court proceeding to distribute the estate of a person who has died. By having a trust, you can avoid a lot of that process with a relatively simple, non-public transfer of your wealth according to your wishes and desires as stated in the trust.

What Are the Disadvantages Entailed in The Use of a Trust?

The main disadvantage in transferring assets to a trust is that the Grantor may give up some control of the asset. With a typical revocable living trust used in estate planning, this loss of control is very small and can generally be revered. For other types of trust, the Grantor gives up more control. However, this loss of control is generally in accordance with their wishes and desires, and brings benefits such as lower taxes, asset protection from creditors, and/or additional estate planning security.

What Can Be a Basic Strategy for Effective Estate Planning using a Trust?

There are some great estate planning benefits that come with setting up a trust. One is that you set out the terms immediately so that you can put together a long-term plan about what will happen to your property upon your death, even from that point a much longer period of time even after your death. Once you fund the trust, that asset is in there so you can essentially set it and forget it. It may only need to be reviewed on an annual basis, if that often. Upon your death, your family does not have to deal with the court proceedings and while alive, you do not have to worry about asset management if you become incapacitated for any reason. Having a trust provides an extra level of security to an estate plan that even a will alone cannot grant you. There is no judge’s ruling on the validity of the trust for the most part, your ability to litigate a trust is different and more limited than you have in a Will.

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What Happens If Someone Dies Without Setting Up a Trust?

For the most part, any assets that are jointly titled with right of survivorship will automatically go to the other person on the title or account. You should review bank accounts, car titles, and deeds to property owned with a second person to see if they are owned with a right of survivorship. Otherwise, the property is equally divided among the owners and the part owned by the deceased is treated as part of their estate.

Assets held in the name of the deceased person are subject to Georgia Estate Law. If there is a Will, the court would admit that Will to probate and then distribute your assets according to the terms of the Will. The Will be published in the court records so it will be something that can be easily discovered by other people.

If there is not a Will, someone will likely petition the probate court to become Administrator over the deceased’s estate. That person will ask the probate court to set up an estate and distribute the assets according to Georgia intestacy laws. These laws state that the spouse, children and other family members to benefit from the estate in certain fixed percentages.

Whether or not the deceased had a Will, any assets before the probate court are subject to the deceased’s creditors. First, your funeral expenses ought to be paid, followed by any other debts owed by the deceased. Only once all those debts are paid or settled, whatever is left behind then gets distributed according to the Will or according to those percentages under Georgia intestate law when there is not a Will.

Not having a trust and subjecting the estate to probate means that assets are often lost before any family members can inherit the property. Depending on the amount of debt owed by the deceased, the family or other beneficiaries might not inherit from the estate at all.

Additionally, during your lifetime, asset held outside of a trust, have a higher possibility of being squandered by if you have a mental incapacity. A person that becomes mentally incapable of running their affairs, likely through a dementia like Alzheimer’s, have a higher risk of being defrauded of their assets by a predator. Even when a trusted person has a power of attorney, it often becomes “stale” and banks will no longer accept it, creating a situation where the only way to manage the assets is to create court-appointed conservatorship. Having a well-drafted trust can often preempt those issues by having a trustee who has a fiduciary obligation to shield those assets from any encroachment or any potential elder abuse or any fraud along those lines.

Finally, if you have no Will or trust, you have very limited control over those assets beyond your death. Even most Wills are limited in allowing you to control property after your death in a way that protects minor children and shields assets from creditors. It’s important for people to talk about setting up a trust with their lawyer to see if it can help them protect their assets and become a key part of their estate plan.

For more information on Trusts in Georgia, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (404) 939-7562 today.

Get your questions answered - Call for a complimentary strategy session at (404) 939-7562.