What types of Trusts can be created in Georgia?
Trusts are becoming more and more popular these days in Georgia. For some, it's because they've lost a loved one and went through the probate process and they want to avoid that for their family. For others, they've lost a loved one who had a Trust and administering the estate was smooth and that's what they want for their family. Either way, there are many types of Trusts that can be created in Georgia and here are just a few:
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Trusts often used by Georgia Residents:
- Revocable Living Trust. The most popular trust in Georgia. This trust allows your family to avoid visiting the Probate Court once you pass away. After all, nobody has ever said, "I can't wait for my family to go to Court when I die." This trust is created while you are alive and you can still manage your assets as you normally would. When you pass, your assets are distributed how you wish without your family visiting the Probate Court.
- Testamentary Trust. This type of trust does not exist until you pass away. In other words, your Last Will and Testament may create this trust, but it may not be created at all. For example, perhaps you have a provision in your Last Will and Testament where you leave an inheritance to your minor child until they reach the age of 21. If they are over that age when you pass away, then the Testamentary Trust would not be created.
- Supplemental Needs Trust. This is a type of Special Needs Trust designed to provide benefits and protect assets for individuals with physical or mental disabilities, without critically separating or affecting their qualifications for government health care benefits that they receive, including long-term nursing care Medicaid benefits.
- Spendthrift Trust. This type of trust is a clever tool for those with an adult child who may be financially irresponsible and/or possibly facing creditors. It is basically an inheritance trust for which you hire a professional trustee to handle the distributions of the inheritance. You transfer assets into the care of an individual or corporate trustee, who delivers regular distributions to the beneficiary of the trust. The beneficiary is unable to control the trust and does not have access to the remaining funds. Meanwhile, the trust continues to generate interest and dividends.
- Pet Trust. This type of trust allows pet owners to create a trust for their animals, including companion animals, racehorses, hunting dogs, and therapy animals. The pet trust must name a "guardian" for the pet which is the person or organization who will be taking care of the animal and the pet trust should be properly funded. Finally, the pet trust should name a remainder beneficiary which the person or organization that will receive whatever is left over after the pet passes away.
- Hybrid Domestic Asset Protection Trust. Asset protection trusts can be used to protect your assets from lawsuits and liability. By transferring assets into an irrevocable trust, you are no longer in control of those assets. They are no longer part of your estate and therefore not accessible to judgment creditors. While Georgia does not allow a Domestic Asset Protection Trust, you can set up a Hybrid Domestic Asset Protection Trust. This can be complex and you should seek the aid of a legal expert.
- Charitable Remainder Trust. You can reduce your income and estate taxes by transferring income-producing assets into an irrevocable trust and taking advantage of charitable income tax deductions with the Charitable Remainder Trust. Upon your death, the assets go to the charity of your choice.
- Medicaid Asset Protection Trust. This type of trust is primarily designed to prevent nursing home poverty. By setting up this trust, you can avoid the need to "spend-down" assets and you can protect your non-exempt assets while still allowing you to be eligible for Medicaid coverage of long-term care expenses.
- 2503(c) Minor's Trust. A Minor's Trust sets aside an inheritance for a beneficiary under the age of 18. The inheritance is protected by assigning a trustee who will have some discretion in distributing the funds for the health, education, maintenance, and support of the minor.
As you can see, a wide variety of trusts and combinations of trusts are available to meet every individual's specific needs. If you are interested in a type of trust that we didn't mention here, we cover more trusts and modifications in our free ebook - Georgia Trusts 101: A How and Why Guide
Your best bet for deciding which trusts can maximize your estate plan is to sit down with an experienced Marietta estate planning attorney, discuss your goals, and design a plan customized to fit your life.
Mr. Farrell is the author of Estate Planning for the Modern Family: A Georgian's Guide to Wills, Trusts, and Powers of Attorney. You can learn about his book here and learn more about John here. Join the more than 1,300 people who subscribe to his Newsletter here. Feel free to send John a message here.
