Estate planning is a milestone for families that want to secure their future and plan for the unexpected. A family’s plan reflects their unique needs and often include a trust or a will. Let’s examine the power of a family trust or a will in a Vinings estate plan. Understand family trusts and wills to choose the right fit for your family’s peace of mind.
What Is a Family Trust?
A Family Trust is designed to strategically manage and protect assets ranging from bank accounts to real estate for the benefit of family members now or in the future.
This three-party relationship consists of:
- The grantor who created the Trust.
- The trustee is named to manage and administer the Trust.
- The beneficiaries receive the money.
Purpose of a Family Trust
The primary purpose of a family trust is to manage and protect family assets for current and future generations. Assets in a trust, provide for loved ones, protect assets from creditors and, in some cases, avoid estate taxes.
Types of Family Trusts
There are different types of family trusts, with unique purposes. The most common types include:
- Living Trust (irrevocable or revocable): Established to hold your assets, as the name implies, while you are alive. A Living Trust also documents your detailed wishes regarding the assets after your passing.
- Revocable Trust: This type of trust allows you to retain control over the trust assets and make changes to the trust as needed.
- Irrevocable Trust: Once set, an irrevocable trust cannot be altered easily. It offers benefits like protection of assets from creditors and potential tax advantages.
- Testamentary Trust: This trust is part of a will and only comes into effect upon death.
- Special Needs Trust: Created to provide for a family member with special needs without disqualifying them from government benefits.
- Marital Trust: Designed to automatically transfer assets to a surviving spouse after the first spouse’s passing.
Establishing a Family Trust
Establishing a family trust involves several steps:
- Decide the type of trust that best suits your needs.
- Draft the trust agreement detailing the terms of the trust.
- Transfer assets into the trust.
- Review your estate plan every 3-5 years to ensure it still matches your personal circumstances and goals. Learn more in our article, When Was Your Last Estate Plan Check-Up in Georgia?
Benefits of a Family Trust
A family trust offers several benefits, including:
- Asset Protection: Protects assets from creditors and legal judgments.
- Tax Advantages: Can help minimize estate and gift taxes.
- Control over Assets: Allows you to specify how and when assets are distributed to beneficiaries.
- Avoiding Probate: Helps transfer assets without probate, which in Vinings, Georgia can be time-consuming and costly.
Revocable Trust vs Irrevocable Trust
Choosing between a revocable and an irrevocable trust depends on your goals:
- Revocable Trust: Offers flexibility as you can make changes during your lifetime. It does not provide asset protection from creditors.
- Irrevocable Trust: Provides asset protection and tax benefits but is less flexible since you cannot easily alter the trust once it is established.
Trust vs Will
A trust and a will serve different purposes in estate planning:
- Trust: Provides for managing and distributing assets during your lifetime and after your death.
- Will: Comes into effect only after death and dictates how your assets should be distributed.
Creating Your Family Trust in Georgia
Creating a family trust involves thoughtful planning to help meet your financial goals. Work with an estate planning attorney in Georgia for a personalized trust that complies with Georgia tax laws and maximizes exemptions. Book a call and ask Timothy Wooten about your estate planning.
Conclusion
Establishing a family trust can be a crucial step in protecting your assets and ensuring the financial well-being of your family. If you’re considering setting up a family trust, contact an experienced estate planning attorney in Georgia to explore your options and create a plan tailored to your needs.
Key Takeaways
- Family trusts offer asset protection, tax advantages and control over the distribution of assets.
- Different types of family trusts cater to various needs, including living trusts, irrevocable trusts and special needs trusts.
- The choice between a revocable and irrevocable trust depends on your specific goals and the level of control you wish to maintain.
- Working with an estate planning attorney is essential in establishing a trust that meets your family’s unique needs.