Roswell Law Blog

Tips for choosing the right trustee

For people in Georgia, choosing the right trustee is an important part of making sure that a trust works as it is intended. There are a number of elements to consider, including whether the trustee should be someone who has a personal connection to the family. The wrong trustee could upset the plans included in even the most carefully designed trust.

A trustee needs more than a good understanding of a person's values and goals for the trust. Trustees have a significant amount of fiduciary responsibility. Being a trustee could involve making the right investments, tax planning and deciding whether or not to grant beneficiaries' requests for distributions. In addition to the financial and legal expertise required, this could also put the trustee in a difficult situation emotionally if the trustee has a personal relationship with the beneficiaries.

Types of trusts to consider with estate planning

Estate planning traditionally starts with a will, which allows you to list out which heirs get which assets. You can leave one child the car, for instance, while another gets the art collection. You can leave them both the house and let them decide what to do with it. Your will gives you a say in how your estate gets distributed.

However, that's a pretty simple way to pass on your estate. What if you want to do something more complex? That's when you use a trust. Instead of giving the money to an heir, you leave it to the trust. The trust comes with a set of rules and regulations that then determine how the money or other assets move on to your heirs.

How nontraditional families might approach estate planning

Traditional families composed of a mother, a father and their children are increasingly in the minority. It is more likely that a Georgia resident who is creating an estate plan is part of a blended family, is one-half of an unmarried couple, is a single parent, or is divorced one or more times with children from each relationship. These are only a few of the family arrangements that can make an estate plan more complex.

A trust can be useful in these complicated family situations, but traditional trusts may need additional provisions as well. For example, with a traditionally structured trust, one person would receive income from the trust, and on that person's death, the remainder beneficiary would receive the rest. However, a better arrangement for some families might involve appointing a trustee with the discretion to make distributions.

Ways to make irrevocable trusts more flexible

Georgia residents often include irrevocable trusts in their estate plans because they protect assets from creditors and provide a number of tax benefits. Irrevocable trusts reduce estate tax exposure because the assets placed into them are no longer considered part of the estate as they are no longer owned by the grantor, but the nature of these documents makes changing their terms difficult. However, there are a number of ways that grantors may be able to make irrevocable trusts more flexible.

One way to provide flexibility is to draft an irrevocable trust that is discretionary. This arrangement leaves decisions about investments and distributions up to the trustee, and it can be particularly useful when beneficiaries have been irresponsible with money in the past. Grantors can choose to give trustees full discretion or include language that sets standards trustees must abide by.

Estate planning in a digital age

People living in Georgia and around the country often understand the importance of putting together an estate plan. This includes writing a will, designating beneficiaries on insurance policies and investment accounts, and considering end-of-life planning in the form of living wills, powers of attorney and advance directives. Many people also hold assets in form of online content, social media accounts, email accounts and loyalty points earned through various businesses. Digital assets can be a tricky area for many executors and heirs to manage.

Many individuals now have some type of online presence, usually in the form of email accounts and participation in social media platforms such as Facebook or Twitter. In addition, people may maintain blogs, photo collections or other types of content. Unfortunately, it can be very difficult for executors to get access to these platforms and accounts after someone dies. As a result, these assets may be vulnerable to hackers who could steal or exploit the deceased's content.

Trusts and wills together offer unique benefits

Trusts can be designed to serve some of the same purposes as wills, but some Georgia residents would do well to have both documents in their estate plans. A will on its own can transfer the assets of a person after he or she dies, and it's the basic essential estate planning instrument for a reason. Trusts can lend many advantages that wills do not, including tax benefits during the life of the person who makes the trust, also called the settlor, and avoiding probate on the settlor's death.

A trust is limited in that it can only control the distribution of assets that have been transferred to its possession. Assets that are not explicitly placed into a trust will not, in most cases, be under the control of the trustee. One popular structure that people use for their estate plans is a pour-over will that's connected to a trust. With this structure, the will is drafted such that the assets of the estate are automatically transferred into the trust on the person's death.

Are your children going to fight over your estate?

You know that you need to leave your assets to your children -- and, potentially, to your grandchildren -- when you pass away. You have started thinking about how you want to do this.

While digging into it, you have started to worry. Are the children going to wind up disputing the estate plan or fighting over the assets? Will you accidentally drive a wedge between two of your children after you're gone? How do you make this go smoothly and avoid these types of difficult arguments?

Tips for creating an estate plan

Putting off the creation of an estate plan is not uncommon. It's a topic that many Georgia residents would prefer to avoid. Furthermore, there is more to an estate plan than just writing a will. Estate owners should start by making a list of all their assets and liabilities. This provides the basis for moving ahead with an estate plan that designates what property will go to which beneficiaries.

It's possible to gift most or all of an estate during one's lifetime; although, there are limits if those gifts are to remain tax-free. In 2019, the limit for tax-free gifting per individual is $15,000. Over a lifetime, the total tax-free gifting limit is $11.4 million. These amounts can change, so it is worth keeping up with those changes if gifting is a significant part of an estate planning strategy. Many people do not realize that estate planning also involves planning for end-of-life care. People should consider what kind of care they want and who they want to make medical and financial decisions for them at this stage.

Celebrity deaths highlight importance of estate planning

Estate planning can be an important part of preparing to take care of family members after people in Georgia pass on. The difficulties that accompany death without a will can grow significantly along with the size of an estate. Nevertheless, some celebrities with massive estates and ongoing, valuable song royalties have passed away without leaving behind a clear plan. As a result, family conflicts may intensify and a significant amount of a valuable estate may be lost to court costs and legal fees.

The deaths of Prince, Aretha Franklin and John Singleton have drawn attention to the importance of estate planning to protect family wealth. Singleton, the famed director, passed away in April 2019, leaving behind a fortune that reportedly totals $35 million. However, he did not leave an updated estate plan. While he had seven children, he left only a will created in 1993 when he had one child alone. All of the children are contesting the distribution of the estate in court. There are some trusts reportedly created by Singleton, and those can pass without the scrutiny and disputes of probate court. However, the lack of an updated will is creating family division as well as economic losses.

Young beneficiaries and trusts

Georgia residents who have young children should make sure that their estate plans include more than just a will. A trust is necessary so that the children will not be able to inherit assets outright when they reach the age of 18; it can ensure that the assets will not be squandered and will be managed responsibly as determined by the trust instructions left by the parents.

The party appointed as trustee of the assets may be able to support the beneficiaries and establish important financial boundaries and guidelines. For example, a trustee can assist the beneficiaries with creating an income flow that will see to all of their needs while keeping the trust principal intact. The trustee can also help the young beneficiaries become financially literate so that they will have the skills necessary to properly handle the assets when they are granted more responsibility over them.

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Herman Law Firm, LLC
760 Old Roswell Rd., Suite 119
Roswell, GA 30076

Phone: 770-609-4468
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