Over the past few weeks, we have discussed the Georgia Advance Directive for Healthcare, a General Durable Power of Attorney for Financial Matters and a Last Will and Testament. When it comes to estate planning, trusts can seem complicated. Revocable, irrevocable, living, funded, unfunded . . . what does it all mean? How can you know if a trust is the right option for you and your family?
Put simply, a trust is a relationship between the grantor, the trustee, and the beneficiaries.
The grantor is the person creating the trust, whereas the trustee is the person who conducts trust business and manages trust assets for the good of the beneficiaries. With some trusts, the grantor may also serve as the trustee of the trust. A trust can be established for a variety of reasons like avoiding messy probate scenarios, planning for incapacity or disability, and avoiding the pricey conservatorship process. However, certain types of trusts can even protect your assets when planning ahead for long term care costs, like Medicaid. Check out our Trust page on our new website!
A trust can help to avoid messy probate scenarios and eliminate needless expenses.
Many people do not realize that assets held in a properly funded trust do not have to go through the probate process. A properly funded trust is simply a trust that actually holds assets or has assets titled in the name of the trust. Upon the death of the grantor, any assets in the trust can be distributed out to the beneficiaries without supervision from the probate court—which is an important goal for many families we serve.
Another great benefit is that, unlike “estate” assets that must go through probate, trust assets are not public record. In addition, heirs do not have to be notified regarding your trust assets like they would if probate is needed. Not only does this keep your affairs private, but it also makes it more difficult for anyone to challenge your wishes.
A revocable living trust can act as a will substitute, providing instructions for the management of your assets on your death. However, whether a will or a revocable living trust is better for you depends on many personal factors.
A revocable living trust can also serve as a vehicle for managing your financial assets if you become cognitively incapacitated or disabled.
For instance, a properly drafted (and funded) revocable living trust can help to avoid embarrassing conservatorship proceedings and costs that go along with that. It can also provide far greater protection and control than a general durable power of attorney since the trustee can manage trust assets for the grantor’s benefit during their lifetime, as well as for the ultimate beneficiaries after the grantor passes away.
An irrevocable trust can also protect assets for those with limited assets who are anticipating long term care costs.
By putting valuable assets, like your home, into an irrevocable trust far enough in advance of needing to apply for Medicaid or VA benefits, the assets held in the trust won’t count towards the asset limits and won’t be subject to estate recovery.
All these choices can certainly be confusing but there are many benefits to using each type of trust for planning purposes. An experienced Hurley Elder Care Law attorney can help determine what kind of trust may be right for you. As Walt Disney said, “The way to get started is to quit talking and start doing”. Call us today at 404-843-0121.
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