Get A FREE Consultation!
We run out of free consultations every month. Sign up to make sure you get your free consultation. (Free $350 value.)
Menu
What are testamentary trusts in Georgia?
In this article, you’ll learn about:
Let’s dig in.
We run out of free consultations every month. Sign up to make sure you get your free consultation. (Free $350 value.)
A testamentary trust in Georgia is a type of trust that is created through a person’s will after they pass away.
The trust comes into existence only after the person’s death and the will has gone through probate.
The will specifies the terms of the trust.
This includes how the assets are to be managed and distributed.
It also names a trustee, who is responsible for managing the trust according to these terms.
The trustee has a fiduciary duty to act in the best interest of the beneficiaries of the trust.
Beneficiaries are the people or entities who will receive benefits from the trust.
This can include family members, friends, or organizations.
The will can specify conditions for distribution, such as:
Testamentary trusts can be used for many purposes in Georgia.
Common uses of a testamentary trust are:
A testamentary trust works as a tool in a person’s will to manage and distribute their assets after they pass away.
Here’s how it functions in straightforward steps:
A testamentary trust helps ensure a person’s assets are managed and distributed as they wish after they pass away.
A testamentary trust forms part of an individual’s will and comes into effect after their death.
The trust’s income, generated by the assets it holds, is subject to income tax.
Trustees, the individuals managing the trust, must file an annual income tax return for the trust.
This income tax return reports all income the trust earns.
When the trust distributes income to beneficiaries, the beneficiaries must report this income on their personal income tax returns.
The trust issues a Schedule K-1 form to each beneficiary for this purpose.
This form outlines the income that the beneficiary must report.
However, when a trust retains income and does not distribute it, the trust itself pays the tax.
Trust tax rates may be higher than individual rates, so trustees often distribute most of the income to beneficiaries.
It’s essential to understand the specific rules of testamentary trust taxation.
These rules can differ by country and can be complex.
Working with a tax professional or financial advisor is often helpful to manage these responsibilities effectively.
There are primarily three types of testamentary trusts that you can establish in Georgia:
Each type of trust serves a unique purpose and is subject to Georgia’s trust and estate laws.
It is important to understand:
To establish a testamentary trust, it needs to be included in your will, and it only takes effect after your death.
A testamentary trust takes effect after the death of the person who created the trust.
This timing is distinct from other types of trusts, which typically begin during the testator’s lifetime.
The trust’s provisions, written into the testator’s will, only come into play after the will goes through probate.
Probate in Georgia is the legal process of validating the will.
Once probate finishes and confirms the will’s validity, the trust can start operating according to the instructions laid out in the will.
How is a testamentary trust different from a living trust?
A testamentary trust is a type of trust that:
This kind of trust doesn’t exist while the person, also known as the testator, is alive.
It’s used to manage the testator’s assets according to their wishes after they pass away.
A living trust is a trust that’s created and operates while the person, known as the trustor, is still alive.
This type of trust can be modified, amended, or even completely revoked by the trustor during their lifetime.
Without going through probate, a living trust helps:
Both trusts serve important roles in estate planning in Georgia.
A testamentary trust can be useful when the testator:
A living trust is beneficial when the trustor wants to:
Let’s look at some pros and cons of testamentary trusts.
Some disadvantages you should be aware of are:
After reading the pros and cons of testamentary trusts, you might want different options.
Here are good alternatives to testamentary trusts, depending on your situation:
Let’s talk about the legal requirements of setting up a testamentary trust in Georgia.
There are several key legal requirements for establishing a testamentary trust in Georgia.
The steps to set up a testamentary trust in Georgia are:
After your death, the testamentary trust will be created during probate.
The court will confirm the trustee, and the trustee will manage the trust assets according to your will’s terms.
Here are other questions our clients ask us about testamentary trusts in Georgia.
A testamentary trust is not revocable.
It is a type of trust created by a will.
And it becomes active only after the death of the person who made the will.
The testator is deceased when the testamentary trust comes into effect.
So, they are unable to make changes or revoke the trust.
While the testator is alive, they can change the terms of the testamentary trust by amending their will.
But, once the testator passes away, the trust’s terms are set and cannot be altered.
Yes, a testamentary trust is irrevocable.
This means once the trust is established, you cannot change or cancel it.
This feature ensures that the deceased person’s wishes, as stated in the trust, are carried out.
But, during the lifetime of the person who made the will, the testamentary trust is considered revocable, as it can be changed or canceled.
Yes, a testamentary trust does go through probate.
This process happens because the trust forms part of the deceased person’s will.
When the person dies, the will, including the testamentary trust, goes through probate.
Probate is the legal procedure where a court validates the will.
After validation, the court oversees the distribution of assets according to the will’s terms.
This includes establishing the testamentary trust.
Once the trust is set up and funded with the probated assets, the trustee can then distribute the trust assets according to the trust’s terms.
If you want help from a Georgia trust law firm, fill out the form below.
At The Hive Law, we understand the importance of:
We only accommodate a limited number of clients each month.
So don’t miss your opportunity to work with our trust fund lawyers.
Benefits of our trust services:
Avoid the pitfalls of inadequate estate planning strategies:
Talk soon.
We run out of free consultations every month. Sign up to make sure you get your free consultation. (Free $350 value.)
Need to keep your money and property safe? We help make sure your hard-earned assets are protected. Our team knows how to create plans that guard against lawsuits and creditors. We work to keep your wealth safe for you and your family’s future.
This website is for informational purposes only. It is not legal advice. Consult an attorney if you are seeking legal advice. Check out our privacy policy.