A trust is an effective estate planning tool for preserving and protecting assets. It is a sheltered legal arrangement that you can structure to meet your specific goals and needs. However, you must consider who and what you want to protect your estate from before you create one.
Protection from creditors and taxes
An irrevocable living trust can shield your assets from creditors and lawsuits. The assets you transfer into it no longer belong to you. The assets belong to the trust, and the trustee you appoint controls the assets. Because it is separate from you, it reduces your tax liability. An irrevocable trust is a permanent arrangement with disadvantages, primarily that you no longer own or control your assets.
It might be important to note that your irrevocable trust arrangement could be voidable under certain circumstances. You must establish an irrevocable trust without the intention to defraud, delay or hinder a creditor. Therefore, you must do it before a creditor or other party has any claim against your assets. Otherwise, if someone were to bring a lawsuit against you, the court could consider it a fraudulent conveyance according to Georgia’s laws.
Protection from probate
Probate is a lengthy and costly process that involves a lot of paperwork and court appearances. A revocable living trust is one way to transfer the ownership of your personal and real property into a legal framework that allows you to designate beneficiaries. You can act as the trustee while you are alive and name a successor trustee. They will take over the trust only when you die.
Because the trust owns the property upon your death, these will not be part of your probate property. Your successor trustee can transfer the assets to your beneficiaries without going through probate.
Protection from your beneficiaries
A trust can allow you to specify the dates and conditions for the disbursement of your assets to your beneficiaries, which can prevent them from spending their inheritances too quickly. You can give your trustee instructions on investing and managing your assets so your estate will continue generating income and paying for your family’s needs.
You can also indicate the purpose of the trust. For example, you could set up a trust to pay for your child’s education or to support a dependent’s special needs. You can even fund a charity of your choosing. A trust can enable you to protect your family’s future and preserve your legacy for years to come.