Trusts and wills have many things in common. Both serve as tools to help you manage, protect and distribute your assets. Similarly, both allow you to appoint individuals you trust to carry out your wishes. However, to learn how wills and trusts work together, it is important to familiarize yourself with these two concepts and the roles they play in estate planning first.
What is a trust?
Trusts are fiduciary legal arrangements that allow third-party entities known as trustees to hold and manage your assets on behalf of your beneficiaries – typically your minor children. This is useful if you want to protect your assets from creditors, minimize taxes, maintain the confidentiality of your estate and avoid probate.
Like wills, trusts are a key part of estate planning and play an important role in naming your beneficiaries and deciding who will receive your assets. In order for it to work, you must fund it and execute it according to Georgia law. This means you must transfer assets such as your real estate and financial accounts to your trustee for it to be effective.
To comply with Georgia Code Title 53 Chapter 12, you require the intent to create the trust, a list of property, a beneficiary, a trustee and duties for the trustee in writing.
What is a will?
Wills are written legal documents that decide how your estate and guardianship over your minor children will be handled after your passing. These documents help you ensure that the court and your family carry out your final wishes.
Without a will, the court will decide how to distribute your assets amongst your living relatives. If you have no relatives, spouse or children, your assets may go to the state.
For your will to be valid in Georgia, it must be a written document. To create a will, you must be at least 14 years old and of sound mind, and you must sign it or appoint someone else to sign it in your stead. You will also require two witnesses, who must be at least 14 years old and not beneficiaries, and they must sign your will in your presence.
What are the benefits of using trusts and wills together?
Trusts and wills are both essential parts of estate planning, working together to maximize your ability to control the distribution of your assets. Trusts and wills can efficiently cover gaps in your estate plan. For example, trusts cannot appoint guardians, but wills can. Conversely, wills only take effect after your passing, but you can still manage your assets with a trust while you live.
By using the two together, you can plan for the future efficiently and effectively, helping you provide for your successors in life and after your passing. While estate planning may be an emotionally exhausting process, it can be liberating. You can take solace in knowing that your belongings will be in good hands and that your legacy will live on.