Irrevocable Trusts are an integral part of most asset protection planning strategies. They are used to protect property and assets from nursing homes and other predators, and, depending on your individual situation, can end up saving you thousands of dollars. East Cobb trusts lawyers have put together some of the basics to give you everything you need to know about Irrevocable Trusts.
Just as the name suggests, an Irrevocable Trust cannot be terminated once it is created, which is what sets it apart from a Revocable Trust. The reason it cannot be revoked is because of the many benefits afforded by the trust for protecting assets and shielding against taxes. Revocable Trusts are good for avoiding probate and allowing successor trustees to manage affairs if the grantor becomes incapacitated, while Irrevocable Trusts are mainly used for asset protection purposes.
A Living Trust
There are actually two types of Irrevocable Trusts – Living and Testamentary. A Living Trust comes into effect and is irrevocable as soon as it is initially funded, meaning the ownership of assets changes while the grantor is still alive and stays that way after the grantor passes away. A Testamentary trust becomes irrevocable when the grantor dies, meaning the terms of the trust cannot be changed after that point. Most Revocable Trusts become Irrevocable at the time of the grantor’s passing, while other Testamentary trusts are created through the Last Will and Testament.
Different Types of Irrevocable Trusts
As noted earlier, Irrevocable Trusts are designed to save money, either by reducing taxes or protecting assets. There are many different types of Irrevocable Trusts available depending on what situation you’re in and what goals you’d like to accomplish. Here are a few of the irrevocable trusts and their benefits:
- A Bypass Trust is used to significantly reduce estate taxes once the second spouse has passed away. The trust holds all the assets from the first spouse, meaning the surviving spouse does not actually own the assets. This reduces the amount of the estate for estate tax purposes.
- A QTIP Trust is used to delay or postpone the payment of estate taxes once the second spouse passes away.
- A Medicaid or Special Needs Trust holds ownership of a person’s assets in order to make them eligible for state and/or federal benefits, either when it is time to enter a nursing home or if the benefits are in danger of being lost due to an inheritance.
If you have questions about setting up an Irrevocable Living Trust, or if you’d like to have your current Irrevocable Living Trust reviewed by an experienced trust attorney, please give our East Cobb estate planning and asset protection planning law firm a call at 770-425-6060, or email us at email@example.com to set up a consultation.
By Steve Worrall, Marietta Wills and Trusts Lawyer
A living trust is a perfect document for protecting privacy, avoiding probate, and determining who can take care of your affairs while you’re incapacitated and after you’ve passed on. It’s often an essential element for estate plans in Marietta as it gives an extra layer of protection to estates and gives the trust maker, also known as the Grantor, added peace of mind that their interests will be protected and their wishes will be carried out. So before you visit a Marietta wills and trusts attorney to set up your living trust, there are some issues you should start thinking about in order to give yourself the best opportunity to achieve your estate planning goals.
- Pick the Goals You Want to Achieve with the Trust
Each person has different needs when it comes to estate planning, and there are many goals that a living trust can help you achieve. For instance, if you want to keep your financial and personal affairs private and avoid a long, drawn out probate proceeding, a living trust will ensure your wishes are met.
- Determine What Assets You Want Protected By the Trust
Once you’ve planned your goals, you will want to decide which assets you’d like to place in a trust. Many people will put their house in the trust since it is their most valuable asset and will likely put them over the threshold when determining whether their estate will go through a large or small probate process. In addition, you may want to consider which financial accounts should go into the trust (typically those held solely in your name) and which should stay out.
- Decide Who Will Act as Successor Trustee
A successor trustee will not only be responsible for the administration of the trust estate once you pass on, but may also be called on to handle your affairs if you become incapacitated, or possibly if you do not want the responsibility of handling your own affairs at a certain point. The successor trustee may also be in charge of managing any property or assets left to minors in your trust, so it is important that you choose someone with a keen financial acumen who you can trust to carry out your wishes.
- Choose Your Beneficiaries
It’s your decision as to whom you want to leave a financial legacy for in your living trust, and it’s something that you must think about very carefully. If you make a choice to omit a family member from your estate plan who would otherwise expect to receive an inheritance from you, it may be a good idea to leave behind an explanation of your wishes concerning the matter.
- Hire an Experienced Marietta Wills and Trusts Lawyer to Draft Your Trust
There are a lot of do-it-yourself programs and cheap alternatives available for creating a living trust, but unfortunately, these documents are often inadequate and will not hold up under probate court scrutiny. That’s why it’s important to research experienced wills and trusts attorneys in Marietta to draft your trust so you have peace of mind knowing that it’s done correctly and your wishes will be carried out.
If you have any questions about setting up a living trust, or if you’d like to have your existing living trust reviewed in order to make sure it is set up properly for your situation, please give our Marietta wills and trusts firm a call at 770.425.6060 to set up a FREE Georgia Family Treasures Planning Session (valued at $600 or more).
Will and trust lawyers in Marietta see plenty of situations where parents who love their children are not entirely in love with their children’s spouses. This can make the estate planning process a little tricky, because the spouse can add tension and stir up drama that wouldn’t have been there otherwise. While some people include their sons-and-daughters-in-law in the planning process, it’s not all that unusual to leave them out.
For the most part, the son-in-law or daughter-in-law isn’t even mentioned in the will. They don’t really even have any legal standing to inherit from the parent unless they are specifically named. So, the parent would name his or her own child, but not the child’s spouse. If the adult child was no longer living, the property would probably end up being inherited by the grandchildren, rather than the spouse.
That’s not to say that a child’s spouse couldn’t end up with an inheritance. If the parents were to leave assets to the adult child and then the adult child passed away, his or her property would likely go to the spouse, and that includes what was inherited from the parents. One would hope that this property would eventually be passed on to the grandchildren (assuming there are grandchildren), but this is not a given, as the spouse would have the legal right to do whatever he or she wanted with it. In fact, if the spouse remarried, his or her new spouse would be the legal choice to inherit any property that was left behind, including that which was inherited this way.
So, can a Marietta will and trust lawyer keep your child’s spouse out of your plan entirely? Yes! You can work with your attorney to develop an inheritance trust that will protect any money you leave your kids from divorce, lawsuits, and creditors and keeps your money in the family.
Creating an estate plan can be emotional and having the additional drama of a difficult personality certainly won’t help matters any. On the other hand, you may absolutely adore your son-or-daughter-in-law and want to make sure that they are taken care of by your estate. In those cases, you will want to make sure that your Marietta GA estate planning lawyer specifically mentions them and what they are inheriting for your own peace of mind.
It will probably cost more initially to set up a well-drafted living trust than to have a will prepared by an Atlanta wills and trusts lawyer. A true cost comparison should include not only the expense to establish the will or trust, but also what it will cost should you become incapacitated and after you die.
The Key Takeaways:
A living trust document has more provisions than a will because it deals with issues while you are living and after you die, while a will only deals with issues that occur after your death.
A properly prepared and funded living trust will avoid court proceedings at incapacity and death. A will provides no such protection and can, in fact, ensure court intervention at both events, which can be very costly (in time, privacy and dollars) to your family.
Instructions at Death and Incapacity
Both a will and a living trust contain instructions for distributing your assets after you die. But a living trust also contains your instructions for managing your assets and your care should you become incapacitated.
A Living Trust Avoids the Costs of Court Interference at Incapacity and Death
A properly prepared and funded living trust (one that holds all of your assets) will avoid the need for a court guardianship and/or conservatorship if you become incapacitated. The person(s) you select will be able to manage your care and your assets privately, with no court interference.
A will can only go into effect at your death, so it can provide no instructions regarding incapacity. In that case, your family would almost certainly have to ask the court to establish a guardianship and/or conservatorship for your care and your assets—a process that is public, time consuming, expensive and difficult to end.
What You Need to Know. The same living trust document that can keep you out of a court guardianship at incapacity can also keep your family out of probate court when you die. But a will must go through probate. Depending on where you live, this can be costly and time consuming.
Costs to Transfer Assets…Pay Now or Later
There may be some minor costs to transfer assets into your living trust when you set it up, and then from your trust to your beneficiaries after you die. But these will be minimal if you and your successor trustee do much of the work yourselves. With a will, the probate court (with its costs and attorney fees) is the only way to transfer your assets to your heirs after you die. So you can pay now to set up your trust and transfer titles, or you can pay the courts and attorneys to do this for you after you die.
Actions to Consider
- Find out what probate costs are where you live. If your state has a fee schedule based on the value of probate assets, this will be fairly easy. If it has “reasonable” fees, ask an attorney to estimate what these fees would be if you die tomorrow and, if you are married, if your spouse dies the next day.
- Similarly, ask your Atlanta living trust attorney to estimate what the costs would be if you become incapacitated tomorrow and, if you are married, if your spouse becomes incapacitated the next day. (Practically speaking, this will be impossible to estimate because no one will be able to predict how long the incapacity will last or what complications might arise. The mere uncertainty of these costs should give you pause—and propel you to plan for incapacity.)
- Add these estimates to the cost of having a will prepared—and compare that to the cost of a living trust. When you make a true comparison, you may conclude that having a living trust actually costs less than a will.
If you’d like to find out whether a will or living trust is the best vehicle for your Atlanta Georgia estate plan, call us at 770.425.6060 and schedule a Georgia Family Treasures Planning Session with us.
One of the jobs of an Atlanta Georgia trust lawyer is to help clients choose the person who will be responsible for a trust that has been set up. The trustee has several very important jobs, and things will go smoother if he or she is aware of these responsibilities up front. Here is some good information that should be shared with a trustee in order to administer the trust with as little difficulty as possible when the time comes.
One Reason “Trust” Is So Important in the Word “Trustee”
In order to ensure that the trust administration goes according to plan, the trustee should review the document that set it out in the first place. It makes sense to do this while the person creating the trust is still alive so that you can talk about the true intentions behind the trust. Both parties may choose to sit down with the Atlanta trust lawyer in order to talk through any confusing points. When it comes time to administer the trust, the trustee will have valuable insight on what was originally intended and how to bring those goals about.
Along those same lines, it is the trustee’s responsibility to make sure that he or she is acting in the best interests of the beneficiaries. If there is a question about how best to manage the assets, the attorney can be brought in for advice and to make sure that decisions being made are in line with Georgia state and federal laws. For this reason, it’s imperative to choose a trustee who not only has good business sense but who is also extremely trustworthy. He or she should understand that the trust is not for personal gain and be able to withstand temptation to use the trust for his or her own benefit.
Keeping Track of the Trust
The trustee’s main focus should be to manage the assets of the trust in the most effective way possible. This may mean investing money in smart ways and also includes distributing funds to beneficiaries when appropriate. One of the easiest things the trustee can do to keep track of funds is to open a checking account for the trust. Any money that comes in or goes out of the trust can go through this checking account, creating an easy-to-see method for tracking income and expenses.
As an added safeguard, the trustee should provide an annual accounting of the trust to the beneficiaries. This allows them to understand how the trust is being managed. It may also be appropriate to provide this information to your Atlanta GA trust lawyer or other legal entity. Keeping in regular contact with the beneficiaries ensures that they are benefitting appropriately from the funds and also develops a relationship of trust between the parties involved.
GeorgiaFamilyLaw : Worrall Law LLC is Your Family’s Lawyer for Life™. We help families protect the people they love and things things they care about with plans that will work when your family needs it the most. Call us today at 770-425-6060 to schedule your Georgia Family Legacy Planning Session ($750 value) at no charge.
There are a lot of reasons to consider setting up trusts for your children, but trust and estates lawyers in Atlanta see far too many cases where this just isn’t done. One of the biggest reasons for not setting up a trust could be that you just don’t think you have enough assets to warrant one. We hear about “trust fund babies” and automatically think of the super wealthy, not regular folks like ourselves.
Really, though, even those in the middle class should be thinking about setting up trusts for their children. Even if you don’t have a lot of extra money lying around, you have other assets that can quickly add up in value. Add to that the payout from a life insurance policy, and you suddenly realize that you have quite a bit of financial worth that might be left behind to children who are not ready to handle it. Anything more than about $100,000 is reasonable to consider putting into a trust for children here in Atlanta
What Does the Trust Do?
When you set up a trust with your trust and estates lawyer in Atlanta, you will discover that there are many different ways to use this tool. One of the most important benefits of a trust is that it allows you to stipulate how your children will use the money you leave behind. If your intention is for your kids to use the money for college, but they want to use it to buy a sports car instead, what’s to stop them?
In your case, the trust is what can stop them. You can implement restrictions on how the money is spent. You can, for example, determine that the funds in the trust are designated for specific functions, such as paying for education or day-to-day expenses. In some cases, there is a designated adult to help keep things on track, although this person must be chosen wisely. In other cases, the parent sets age limits on the trust, assuring that the children don’t have access to the money until they have more time to mature.
Protecting the Trust
Another reason to consider a trust is to protect your children’s money from misuse by the adult in charge of the funds. In the case of a “custodial” account, the person in charge can have a lot more say in how the money is spent. This could translate into frivolous expenses, including paying himself or herself an unrealistic amount to “manage” the funds. With a trust, however, the person in charge (the “trustee”) is held more accountable and is required to follow your wishes.
If the trustee does manage the funds poorly, it is also possible that your child would have some legal recourse, as the trust is a legal contract.
Talk to an Atlanta Trust and Estates Lawyer
The best way to determine if a trust is right for you and family is to talk to an Atlanta trust and estates lawyer. Our attorneys are available to sit down with you at no-charge to review your estate plan and consider how a trust or other estate planning tools can best meet your needs. To schedule a complimentary Georgia Family Treasures Planning Session, simply call 770.425.6060 and mention this article.