What is a Trust?
You may have read about a trust on the Internet or have spoken about one with a friend, neighbor or family member. However, you still may not fully understand what one is. Speaking with an estate planning lawyer will help you through the entire process from creation to dissolution
According to the Internal Revenue Service, a trust is a legal entity with the following attributes:
- Settlor. This person starts the process, contributes funds and determines the purpose.
- Trustee. This is a legal person (an individual, financial institution, etc.) that holds on to the property contributed by the grantor and acts on direction of the grantor.
- Beneficiary. The beneficiary is the intended party for which the grantor’s property or money is intended. The trustee handles all financial transactions within the trust that are for the intended purpose of the trust.
How is a trust created and made valid?
Speaking with an estate planning lawyer is the best way to ensure your estate planning is done correctly. However, here are some things that must be done in order for it to be valid in Georgia:
- It must be in writing. The individual creating the trust itself or someone permitted under a power of attorney may sign on their behalf.
- It must have property. For real property (land, buildings, etc.), a title attesting to ownership must be valid.
There are many more attributes to a legal and valid trust; however, these are two very important attributes. Speaking with an Estate Planning lawyer at the Law Offices of Shane Smith will help you understand all of the legal requirements of a trust. Contact our law firm today at (770) 487-8999 today!
Purposes of a Trust
As people raise families, amass wealth, or merely want to plan for retirement, they likely want to do everything they can to protect their estate. Trusts are one of many estate planning mechanisms that help individuals and couples protect their assets and property and ensure that everything is distributed in accordance with their wishes following their death. However trusts may serve many other purposes than merely estate distribution. An estate planning attorney can help you decide which kind of trust is right for you and your financial and estate planning goals.
Some of the different purposes for forming a trust include:
•Privacy—The terms of a trust are private, while the terms of a will are public. Therefore, trusts may be used solely to keep information regarding your assets and estate plans private.
•Tax planning—In certain cases, trusts may be used to avoid or decrease taxes on your assets or property.
•Estate Planning—Trusts are often used in addition to wills for estate planning, especially if some of your expected beneficiaries will be minors and need a trustee to make financial decisions.
•Asset protection—Some types of trusts can work to protect your property and assets from creditors or bankruptcy proceedings.
•Spendthrift protection—If you believe one or more of your beneficiaries may use their inheritance frivolously or may get into financial trouble, you may use a trust with a spendthrift clause to control the money they receive and protect it from potential creditors.
•Co-ownership—Joint ownership of property is often facilitated by trusts, with the property held in trust and both owners as trustees.
As you can see, trusts may serve many different purposes for people in many different situations. If you have property and assets, you likely want to do everything you can to maintain the integrity and value of your estate. Trusts may be used to do this in a number of ways. Contact an estate planning lawyer at the Law Offices of Shane Smith at (770) 487-8999 to inquire about forming a trust today.
Common Types of Estate Planning Trusts
Trusts are an extremely effective way for individuals to protect their assets from creditors and potential litigants. At their most basic, a trust is a legal relationship in which a person, known as the settlor or grantor, places certain assets in the care of another party, who is known as the trustee, for the benefit of the beneficiaries of the trust. Trust law is extremely complicated, and certain formalities must be observed when creating a trust. As a result, estate planning trusts should be set up with the help of an experienced estate planning attorney. A lawyer who is familiar with Georgia trust law can help identify the type of trust that will achieve your goals, help create the trust, and can even serve as the trustee of the trust assets.
There are many types of trusts that can be used to estate planning purposes. Below is a brief description of some of the most common, as well as information on how they may be utilized.
- Living Trusts – Also known as an “inter vivos” trust, these trusts are created while a person is alive. In a living trust, you act as the trustee and as the beneficiary. One of the main advantages of living trusts is that they are extremely flexible. The trust creator maintains control of his or her assets, and may give trust assets to anyone at any time. These trusts are can provide people with certain tax and asset protection benefits, and can also be converted into testamentary trusts after one’s passing.
- Testamentary Trusts – A testamentary trust does not go into effect until the grantor passes away. These types of trusts are often created within a will, and are often used to transfer assets to descendants or other parties.
- Spendthrift Trusts – A spendthrift trust is created when a beneficiary may be prone to wasteful or excessive spending. It can protect assets by preventing creditors from reaching the trust assets before a beneficiary receives a trust distribution.
- Incentive Trusts – Incentive trusts are used to encourage or discourage certain behavior on the part of the beneficiary or beneficiaries. These trusts will tie trust distributions to certain conditions, such as attaining a particular degree or entering a particular profession.
Contact an Estate Planning lawyer for a consultation
There are many other types of trusts that can be used for estate planning purposes. The one that is right for you will depend on your particular circumstances and goals. Anyone considering the creation of any of the various types of estate planning trusts available should be certain to consult with an experienced estate planning attorney. To schedule a free consultation with one of our lawyers, call the Law Offices of Shane Smith today at (770) 487-8999.