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.
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.
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.
Many adults fail to make an estate plan, but it can be especially important for single parents in Georgia and around the country to do so. One of the functions of an estate plan for parents is to appoint someone to be guardian for their children. While this could be the other parent, if that parent is unable to step into this role for any reason, appointing a guardian can ensure that the child is raised by someone a parent chooses.
An irrevocable trust is generally thought of as a trust to which changes cannot be made. While this offers greater protection to the assets in the trust, it also means that if circumstances change, a person may be stuck with a trust that is no longer useful. However, a number of states, including Georgia, offer a "decanting" option to change an irrevocable trust if necessary.
In 2001, Georgia residents and others could only exempt $675,000 from federal estate taxes. Today, that amount has risen to $11.8 million. However, it doesn't mean that it isn't a good idea to establish a trust as they can provide benefits beyond a lower estate tax bill. For instance, putting assets in a trust means that they will be protected from creditors, which means that the asset stays in the family.
Recently, we wrote a post on trusts and whether or not they might be the right for you. Now that you might have a better understanding of trusts, you should know about the importance of one specific trust for an important member of your family: your pet.
No one wants to think about what happens after death, but it's important to start making plans for your loved ones now. You don't have children, but you do have a faithful pet who has been your companion and loved you for years. What happens if you pass away without a plan in place for him? He has no home or person to take care of him.