As experienced estate planning attorneys in Savannah, Georgia, we have seen firsthand the importance of trusts for high-net-worth individuals and families. Trusts provide a valuable tool for protecting assets, ensuring your wishes are carried out after you pass away, and avoiding probate. In this blog post, we’ll dive into the specifics of how trusts work in Georgia, but first, let us share a story that illustrates the importance of estate planning and trusts, even for celebrities.
In 2018, the world was shocked to learn of the sudden passing of famed celebrity chef, Anthony Bourdain. Bourdain, who had a net worth of over $1.2 million, was known for his love of travel, food, and culture, and had a successful career in television and publishing. However, despite his success, Bourdain had not updated his estate plan in several years, and his will was not properly executed.
As a result, Bourdain’s estate was subject to probate, a legal process that can be lengthy, costly, and (in this case) very public. Additionally, because Bourdain was separated at the time of his death, his estate was subject to state intestacy laws, which meant that his assets were distributed according to state law rather than his personal wishes.
This unfortunate situation serves as a reminder of the importance of estate planning, no matter how successful or wealthy you are. And, for high-net-worth individuals and families, trusts can be an essential part of an estate plan. Let’s dive into the specifics of how trusts work in Georgia and how they can benefit you.
What is a Trust?
At its core, a trust is a legal arrangement in which one person (the trustee) holds and manages property for the benefit of another person or group (the beneficiaries). Trusts can be used to manage and distribute assets during a person’s lifetime or after their death. They can also be used for a variety of purposes, such as tax planning, charitable giving, and asset protection.
In Georgia, there are several types of trusts, each with its own unique characteristics and benefits. Some common types of trusts include:
- Revocable Trusts: A revocable trust, also known as a living trust, is a trust that can be changed or revoked by the grantor (the person who creates the trust) at any time during their lifetime. Revocable trusts are often used to avoid probate and provide flexibility in estate planning.
- Irrevocable Trusts: An irrevocable trust is a trust that cannot be changed or revoked by the grantor once it has been created. Irrevocable trusts are often used for tax planning, asset protection, and charitable giving.
- Testamentary Trusts: A testamentary trust is a trust that is created under a person’s will and does not come into existence until after their death. Testamentary trusts are often used to provide for minor children or other beneficiaries who may not be capable of managing assets on their own.
- Special Needs Trusts: A special needs trust is a trust that is created for the benefit of a person with a disability. Special needs trusts are often used to preserve eligibility for government benefits while providing for the beneficiary’s needs.
- Charitable Trusts: A charitable trust is a trust that is created for the benefit of a charity or charities. Charitable trusts are often used for tax planning and philanthropy.
How Does a Trust Work in Georgia?
In Georgia, trusts are governed by the Georgia Trust Code, which sets forth the rules and regulations for creating, administering, and terminating trusts. To create a trust in Georgia, the following elements must be present:
- The intent to create a trust
- A trustee who is willing and able to act
- One or more beneficiaries
- Property or assets that are placed in the trust
- A valid trust agreement that outlines the terms and conditions of the trust
Once these elements are in place, the trustee is responsible for managing the trust assets and distributing them to the beneficiaries according to the terms of the trust agreement. The trustee has a fiduciary duty to act in the best interests of the beneficiaries and must follow the instructions set forth in the trust agreement.
One of the primary benefits of a trust is that it can help avoid probate, which is the legal process by which a person’s assets are distributed after their death. Probate can be time-consuming, expensive, and public, and it may not always result in the distribution of assets according to the deceased person’s wishes. By placing assets in a trust, they can be distributed to the beneficiaries outside of probate, which can save time, money, and hassle for the family.
Another benefit of trusts is that they can help protect assets from creditors and lawsuits. Depending on the type of trust and the specific provisions in the trust agreement, assets in a trust may be shielded from creditors or lawsuits, which can provide peace of mind for high-net-worth individuals and families.
Trusts can also be a valuable tool for tax planning. Depending on the type of trust, assets in a trust may be subject to different tax rules and rates than assets held individually. Additionally, trusts can be used to minimize estate and gift taxes by reducing the size of a person’s taxable estate.
Overall, trusts are a powerful estate planning tool that can provide numerous benefits for high-net-worth individuals and families. However, it’s important to work with an experienced estate planning attorney to ensure that your trust is properly structured and executed to achieve your goals.