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The Best Types Of Trusts In Georgia

Types Of Trusts In Georgia - types of trust funds - types of trusts for estate planning

Wondering what types of trusts in Georgia are available?

This article is going to break down:

  • the different types of trusts in Georgia
  • the benefits of each trust
  • using a trust for estate planning
  • revocable vs irrevocable trusts in Georgia
  • how to set up a trust in Georgia

Let’s dig in.

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Overview Of Types Of Trusts In Georgia

With proper estate planning, you can protect your assets.

And make sure that:

  • your family gets hit with minimal estate taxes
  • your assets are not mismanaged
  • the distributions get distributed how you want them to
  • your assets get passed to the correct people and charities

Many people believe that having a last will in Georgia is enough to protect their inheritance.

The problem with the last will is that it can get contested during the probate process.

When a will gets contested, the probate courts can decide to ignore it.

Meaning that the grantor’s assets get passed down per intestate laws in the state of Georgia.

But with different types of trusts in Georgia, you can pass assets directly to your loved ones.

There are several reasons why you’d prefer to set up a trust in Georgia.

And each trust has different strategies to meet different goals you may have.

Trust Definition

A trust is a fiduciary agreement allowing a trustee to hold assets on behalf of beneficiaries.

What Is a Trust?

A trust is a legal document that allows a trustee to hold title to a grantor’s property.

The trustor gives the trustee the right to hold and manage their property and assets.

(Trustors are also known as a settlor, trust makers, or a grantor.)

A trustor is a person who creates the trust.

(Hence, the name trust maker.)

A trustee is a person who has the fiduciary responsibility to manage the trust.

Trusts are an estate planning tool that gets used to:

  • provide legal protection for the trustor’s assets
  • avoid the probate process in Georgia
  • create rules for how assets get managed
  • create rules for how assets get distributed
  • keep your financial matters private from public records
  • asset protection to avoid litigation on your assets
  • avoid conservatorship (having someone appointed to manage your assets)

A trust gets set up in Georgia to pass assets to beneficiaries.

Depending on the types of trusts in Georgia, beneficiaries of a trust can include:

  • surviving spouses
  • adult and minor children
  • family members
  • friends
  • charities
  • business partners

Someone named in the trust document can receive assets or distributions from the trust.

The types of trust assets you can include are:

  • real estate (homes, land, rentals, etc.)
  • bank accounts
  • investment brokerage accounts
  • retirement accounts (401k, Roths, Pensions, etc.)
  • crypto wallets (Coinbase, MetaMask, Gemini, etc.)
  • life insurance policies
  • business interests
  • collectibles and antiques

Once you set up a trust in Georgia, you can fund it.

A trust “gets funded” once you transfer assets to the trust.

And the trustee starts managing them.

Now, let’s go over common types of trusts in Georgia estate planning.

Trusts For Estate Planning In Georgia

A trust benefits the trustor and the beneficiaries.

An estate planning attorney in Atlanta can set up a trust to:

  • avoid the probate process
  • manage assets while you’re incapacitated
  • manage your business interests if incapacitated
  • set assets aside to care for special needs family members
  • establish rules beneficiaries have to follow to get their inheritance
  • preserve assets to care for minor children when you die
  • reduce estate taxes and gift taxes

Trusts are especially useful if you don’t think your family can manage the money.

It’s common knowledge that wealth gets lost each generation it’s passed to.

Setting up different types of trusts in Georgia can protect your family from themselves.

And set up rules on:

  • how the assets should get managed by the successor trustee
  • how the assets should get distributed to family members

For example, you can set up rules like your beneficiaries have to:

  • invest 10% of their income to receive distributions from the trust
  • complete a college education to start receiving distributions
  • invest their distributions into index funds
  • invest their money into real estate that meets certain analysis criteria

Revocable vs Irrevocable Trusts

We’re going to dive into the specific types of trusts in Georgia.

But it helps to understand the two broad categories of trusts.

And talk about what is the difference between a revocable and irrevocable trust.

These are the common types of trust categories.

Revocable Trust Definition

A revocable trust places a grantor’s assets into a trust during their lifetime.

Then, the successor trustee distributes the assets to the beneficiaries after they die.

Revocable Living Trusts

Revocable trusts are also referred to as revocable living trusts.

These types of trusts in Georgia are also called “Inter Vivos Trusts.”

They allow you to maintain control of your assets during your lifetime.

Basically, you are the trustor and the trustee.

You get to manage the trust yourself.

You are able to change or dissolve the revocable living trust documents at any time.

You are able to “revoke” revocable living trusts.

You can update the trust assets if you go through a divorce in Georgia.

Or, if you buy more assets or start new businesses.

Revocable living trusts give you a lot more flexibility than irrevocable living trusts.

The guidelines you create for the trust aren’t permanent until you die.

Once you die, the successor trustee has to follow the terms of the trust.

You can even choose a trustee to manage the trust while you’re alive.

Revocable living trusts are a more effective estate planning tool than the last will.

Living revocable trusts do not go through the probate process.

This allows greater privacy and trust asset protection than a last will and testament.

And creditors have a harder time claiming trust assets compared to the last will.

But, creditors and lawsuits can still get ahold of the assets in these trusts.

An irrevocable trust is a type of trust in Georgia that provides asset protection.

Compared to creditors being able to come after your estate with a will.

Irrevocable Trust Definition

An irrevocable trust is a type of trust that cannot get changed or revoked after it’s created.

Irrevocable living trusts are permanent legal documents in the state of Georgia.

Irrevocable living trusts are also called “Inter Vivos Trusts,” too.

Irrevocable Living Trusts

This is the difference between a revocable trust vs an irrevocable living trust.

A revocable trust is permanent after the trust maker dies.

The irrevocable living trust is immediately permanent.

Once you create an irrevocable living trust, you cannot change, amend, or dissolve it.

Let’s say you transfer assets or real estate into an irrevocable trust.

You cannot undo that action even if you are still alive.

This means that an irrevocable trust is less flexible than a revocable one.

Irrevocable living trusts give you better estate tax benefits than revocable trusts.

You can place assets into these types of trusts in Georgia.

This reduces your estate’s value, eliminating federal estate taxes.

Since this reduces your personal assets, you can qualify for government benefits.

Benefits like social security and Medicaid.

And irrevocable trusts help you avoid creditors and lawsuits.

This is because you “no longer own assets.”

Special Types of Trusts In Georgia

What about the different types of trust in Georgia outside of those two?

Georgia offers all sorts of different types of trusts for your estate planning.

The types of trusts that you use depend on your goals with your estate.

Marital Trusts

A marital trust is really good for setting up a surviving spouse with all of your assets.

A marital trust gets used to pass assets to surviving spouses and family members.

Family members are usually children and grandchildren.

The surviving spouse gets the assets and the income in the marital trust in Georgia.

This is because the martial trust passes assets to surviving spouses tax-free.

The marital trust in Georgia allows the surviving spouse to not pay estate taxes.

The surviving spouse can use the principal and income from the marital trust.

It all depends on how your estate planning attorney sets it up.

The estate planning attorney can give the surviving spouse “general power of appointment.”

This means they can give instructions to the trustee to transfer assets to them.

But, let’s say that the surviving spouse dies and the marital trust goes to the remaining heirs.

The heirs will have to pay estate taxes on the remaining trust assets.

Avoiding estate taxes is only allowed by the surviving spouse.

Not by other family members who inherit the trust assets.

Bypass Trusts

A bypass trust is an irrevocable trust that bypasses the probate process.

Many high net worth couples use these types of trusts in Georgia as an estate tax shelter.

Because it’s an irrevocable trust, it allows you to bypass probate.

And you can avoid paying federal estate taxes on up to $12.06M.

While it avoids federal taxes, you still have to pay state estate taxes on this property.

Property in the bypass trust does not belong to the surviving spouse.

But they have the right to be the surviving trustee.

And they can receive income from the bypass trust’s assets.

As a trustee, the surviving spouse has a fiduciary responsibility to the beneficiaries.

They must manage the assets in the trust in the best interests of the beneficiaries.

Once the surviving spouse dies, this trust gets passed to the beneficiaries.

Bypass Trusts + Marital Trust Combination

Bypass trusts and marital trusts get used together.

The marital trust allows the surviving spouse to have access to the assets in the trust.

A marital trust is revocable.

Meaning that the assets can get sold and the trust can get dissolved.

The bypass trust is an irrevocable trust.

Couples put assets in this trust to avoid estate taxes up to the federal estate tax limit.

Meaning that they will put $12.06M into the bypass trust.

And they will put the remaining estate into the marital trust.

They can pass the estate down to their beneficiaries.

Without paying estate taxes in the bypass trust.

But the surviving spouse can still earn income from the bypass trust.

And then, the surviving spouse can do whatever they want with the marital trust.

Once the surviving spouse dies, the marital trust gets passed down.

This trust structure is complicated.

You should have a Georgia estate planning attorney set this up for you.

Charitable Trusts

There are two types of charitable trusts in Georgia.

A charitable lead trust and a charitable remainder trust.

These charitable trusts will last a set amount of time.

Let’s say you put assets into a charitable trust.

The charitable lead trust funds the charity first.

Then, after that “set amount of time” is over, the remaining money goes to beneficiaries.

The charitable remainder trust funds the trust maker’s life first.

Then, after that “set amount of time” is over, the remaining money goes to charities.

The charitable trusts will generate a stream of income for the charity or donor.

Then the remaining assets get passed down to either the charity or beneficiaries.

Money that gets placed into the trust is a tax-deductible donation.

You can put cash, stocks, ETFs, mutual funds, or real estate into a charitable trust in Georgia.

Generation-Skipping Trusts

A generation-skipping trust allows you to pass assets to grandkids and great-grandchildren.

It’s a legal document that allows you to skip passing assets to your children.

Allowing you to pass assets to other generations. 

This estate planning tool gets used when you have passed assets to your children.

But you want to go ahead and leave other family member’s assets.

Without having to pay estate taxes for the generation you’re skipping.

But, a generation-skipping trust in Georgia isn’t only for grandchildren.

It’s for family members who are at least 37.5 years younger than the trust maker.

Generation-skipping trusts are irrevocable trusts.

This means that you can avoid paying federal estate taxes with these types of trusts in Georgia. 

Your Georgia estate planning attorney can set this up to still benefit your children.

Your children can still earn income from the trust assets.

But, they cannot receive the assets themselves.

This type of trust gets used for avoiding paying estate taxes on one generation.

Life Insurance Trusts

Life insurance trusts get used for managing life insurance policies.

They hold and control the life insurance policies while the grantor is alive.

And they distribute the life insurance policies when the grantor dies.

They can hold individual life insurance policies.

These can be either term or permanent life insurance.

They can also hold “second to die” life insurance policies.

Second to die life insurance policies insure two people.

And they pay a death benefit when both people die.

Life insurance trusts are irrevocable trusts in the state of Georgia.

Once the trust gets funded, it’s permanent.

An irrevocable life insurance trust can get used to:

  • reduce estate taxes
  • avoid gift taxes
  • protect government benefits
  • asset protection
  • control the distribution of life insurance policies
  • legacy planning
  • various tax considerations

A trustee manages the life insurance trust based on the terms of the trust documents.

Medicaid Trusts

A Medicaid trust gets used for planning health care.

You can use it for yourself and a spouse.

Your eligibility for Medicaid is limited by the value of the assets you own.

For a single person, you can’t own more than $2,000 in assets.

For a married couple, the asset limit is $3,000.

This means that you cannot own more than $2,000-$3,000.

Without losing your eligibility for Medicaid.

People place their assets into a Medicaid trust so that they can qualify for Medicaid.

When you no longer own those assets, you improve your eligibility for Medicaid.

The Medicaid trust owns the assets.

This allows you to qualify for Medicaid.

It’s an estate planning tool that helps you keep your wealth to pass down to your family members.

Instead of using that retirement money to pay for your long-term health care.

Medicaid trusts are great for people who have retirement.

But they don’t have enough wealth to pay for long-term health care and pass assets down.

This allows people to use Medicaid to pay for long-term health care.

Instead of depleting the assets they’ve saved up to pass down.

Maybe one spouse needs long-term health care.

But the other spouse doesn’t.

And spending all of your retirement on health care would deplete your retirement.

And leave your surviving spouse with no assets to live on.

Our estate planning attorneys in Atlanta can create your Medicaid trusts.

Special Needs Trusts

Leaving your assets to a family member with disabilities can mess up their finances.

Meaning they may no longer qualify for SSI and Medicaid if they own the assets you pass to them.

A special needs trust holds the assets for your loved ones so they can still qualify for aid.

You appoint a trustee to manage and distribute the money for your family member.

This allows the beneficiary to receive the assets and distributions from the trust.

Without them having any control over the assets in the special needs trust.

But they cannot directly receive income from the special needs trust.

A special needs trust is one of the types of trusts in Georgia that can pay for things like:

  • personal care attendants
  • vacations
  • home furnishings
  • out-of-pocket medical and dental expenses
  • education
  • recreation
  • vehicles
  • physical rehabilitation

This means the SSI and Medicaid administrators will ignore the trust’s property.

And it allows your loved ones to maintain their eligibility. 

The trust dissolves when the funds run out or the beneficiary dies.

Spendthrift Trusts

Worried about a family member blowing your inheritance?

Spendthrift trusts protect the property from irresponsible beneficiaries.

And it protects the trust assets from their creditors.

Creditors can come after their:

  • liabilities
  • money they owe for gambling
  • loans
  • etc.

A spendthrift trust limits the benefeciary’s access to the principal assets.

Since the beneficiary cannot access the principal, neither can their creditors.

And they cannot pay for their liabilities with the principal trust assets.

The beneficiary receives distributions from the spendthrift trust.

This can be in the form of regular payments from the trust.

Or it can be in the form of goods or services paid for by the trustee.

How and when the beneficiary gets paid gets determined by the terms of the trust.

The trustee follows the instructions in the legal documents.

There is a disclaimer, though.

Creditors can come after the distributions made to the beneficiaries.

But, that’s the beneficiary’s responsibility.

Not the successor trustee’s responsibility.

And the beneficiaries can pay for their liabilities with this trust income.

Testamentary Trusts

 

Testamentary trusts get used for people who have minor children or grandchildren.

A testamentary trust gets created per the instructions in the last will in Georgia.

This type of trust in Georgia does not get created until the grantor dies.

Once the grantor dies, the testamentary trust gets created per the will’s instructions.

The terms of the trust can get changed at any time while the grantor is alive.

This is because the testamentary trust does not get created until they die.

The testamentary trust will hold all the assets outlined in the last will.

Then, the successor trustee distributes the trust per the will’s instructions.

Testamentary trusts are a great estate planning tool if you have minor children.

Your Georgia estate planning attorney can set it up to distribute assets at certain milestones.

The assets get distributed after the minor children:

  • reach a certain age
  • graduate from high school or college
  • get married

Totten Trusts

A Totten trust is a payable on a death bank account.

A Totten trust allows you to transfer money without going through the probate process.

When you die, the bank account goes to the beneficiaries.

Totten trusts get created by the bank that holds your account.

All you have to do is ask them for a Totten trust or Pay On Death form.

Fill these out and sign them at your bank.

In these forms, you’ll name the beneficiaries for your accounts.

The beneficiary cannot access your funds while you’re alive.

They can only access the funds after you die.

And they won’t have to go through the probate process to gain access to these funds.

Totten trusts are a very popular Georgia estate planning tool.

How To Set Up A Trust In Georgia

A well-crafted estate plan protects the interests of you and your loved ones.

Estate plans should include:

A trust will ensure your assets get passed down without the probate process.

There are just six steps to setting up a trust in Georgia:

  1. Decide which type of trust in Georgia you want
  2. Create a trust document and the terms of the trust
  3. Sign and notarize the legal documents
  4. Set up a trust bank account
  5. Transfer assets into the trust
  6. For other assets, designate the trust as beneficiary
  7. Our Atlanta estate planning attorneys set up trusts for residents all over Georgia.

We work remotely from Atlanta, so you don’t even have to come into an office.

Fill out the form below to set up your trusts.

How To Work With The Best Estate Planning Attorneys

If you want the most secure trust documents, fill out the form below.

We have the experience needed to ensure that you, your assets, and your family are protected.

This means that you don’t wrongfully lose assets to creditors and lawsuits.

We also make sure that you reduce your tax liabilities and avoid probate when possible.

This means you and your family don’t get raked over the coals financially.

After you fill out the form below, we will set up your free consultation.

Talk soon.

(Our estate planning attorneys have the most experience in Atlanta to help you.

And to make sure your trust documents protect your family’s assets.)

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