Trusts aren’t just for wealthy people. Every individual has the right to dispose of or distribute their assets for their loved ones. If you are thinking of creating your estate plan, entering into a trust agreement can be beneficial. It’s not too soon to be prepared. The earlier you avail of an estate plan, the better it is for your loved ones.

What is a trust?

A trust is a legal arrangement whereby a person transfers his property to a trust entity for the benefit of himself or a third party. Simply put, there are three parties involved: the grantor, trustee, and the beneficiary. The grantor owns the property and then transfers it to the trustee. The trustee takes care of the property until such time when the beneficiary will receive the property.

Why enter into trusts?

Trusts can eliminate the necessity for probate. Probate is a judicial proceeding where the court determines the validity of a will. This process can be lengthy and complicated. To save time, parties can enter into trust agreements to ensure the efficient distribution of assets to the beneficiaries.

There are many benefits in entering into trusts. 

Examples of these benefits are:

  • You do not have to file for probate proceedings.
  • You can decide what asset the beneficiary will receive.
  • You can choose when your beneficiary obtains your asset.
  • Your assets can be distributed even when you are alive.

How do trusts work?

There are different kinds of trusts. The most common are Revocable and Irrevocable. Revocable trusts essentially offer the opportunity to amend the terms of the agreement at any time. On the other hand, Irrevocable trusts cannot easily be amended. However, they can protect your assets from any claims or charges. Choosing what kind of trust will depend on how you want to distribute your assets.

Georgia recently modernized its law on irrevocable trusts. There are a variety of ways on how trust funds distribute your assets. However, the most common are Outright, Staggered, and Discretionary.

Outright distribution is the simplest method as your assets are distributed when you pass away. On the other hand, Staggered distribution hands out your assets upon the happening of specific events such as graduations and weddings. Meanwhile, discretionary distribution empowers your trustee to distribute your assets to your beneficiaries when they feel like the time is right.

Questions about establishing a trust or how beneficiary assets are distributed? Contact the team at Smith Barid today.