Trusts can be a helpful estate planning tool when used correctly. Knowing the consequences of using a trust and when to not use one will help you.
Using Trusts in Estate Planning
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A popular option for estate planning is creating a revocable living trust, also known as an inter vivos trust. This type of trust can be revoked or changed at any time.
While you are still alive, you will typically be a ‘trustee’ of the trust. Trustees have control over the assets of the trust. To set up the trust, you need to transfer assets you own to the trust. The trust documents then need to name a successor trustee and beneficiaries.
A successor trustee takes over the management of the trust after you pass away. Beneficiaries are those who will inherit the assets of the trust upon your death.
Creating a living trust is an alternative to creating a will as part of your estate plan. In Georgia, a will must be filed at a probate court to be executed.
Living trusts can be helpful in estate planning, but they also contain some hidden technicalities that can prove disadvantageous.
This article explains some disadvantages you may face when deciding to put up a living trust.
What Should You Not Put in a Living Trust?
While you can transfer most of your assets into a living trust, there are certain assets that you cannot transfer to your living trust. Examples are:
- Retirement accounts used in retirement planning
- Health and medical savings accounts
- Gifts and transfers to minors
- Life insurance
- Financial accounts that you pay bills with and are active
- Motor vehicles
An experienced and qualified estate planning attorney will often provide legal assistance to help you determine which of your assets can go into the trust and which can’t.