The more straightforward trust to understand is the Irrevocable trust. If you place property, assets, etc., into an irrevocable trust, you commonly cannot retrieve the property or reclaim it. The property or assets are no longer your possessions, and it all now belongs to the trust.
However, you can place property and assets into the trust with a revocable trust and legally undo the transfer by removing the property or terminating the trust.
Also, if you die or become mentally incompetent, provisions of a revocable trust usually call for the trust to immediately become an irrevocable trust.
So, you can terminate your revocable burial trust almost any time but before your death or incompetency. There also are situations where your burial exists when you die or become incompetent, and then the trust may become irrevocable, but money is used for your burial expenses.
A Trust has numerous variations, though, and you could have gift tax consequences if you establish an” intervivos irrevocable trust.” So, it’s prudent to ensure that your accountant is “in the loop,” along with your professional estate planning lawyer.
It’s also expected that certain transfers within specific periods before your death can be included in your estate as “gifts in contemplation of death.” This legality holds under both state and federal statutes. So, it’s always important to be aware and plan for death tax implications.
Will a Revocable or Irrevocable Trust Affect My Estate Taxes?
An extremely significant distinction between revocable and irrevocable trusts is the tax implications regarding your estate. Any property that you place in an irrevocable trust is immediately considered separate and no longer part of your estate. This legally translates that the property is not included in your estate’s value when determining if you owe death taxes, etc.
On the other hand, if you still own property and it’s placed into a revocable trust, this property may still be subject to death taxes. If, at any time, you change your mind about the trust and retrieve your property while you’re still alive, the property remains yours and should be considered part of your estate.
So, the question is: if you only get a break on estate taxes with an irrevocable trust, why would you ever want to use a revocable trust and lose this estate tax break? This is a valid concern, but your estate tax savings is only one of many reasons you may consider including a trust in your estate plan. Also, if your estate’s value is nowhere near the federal estate tax exemption limit, you don’t usually need to be concerned about federal estate-tax-saving tactics.
Your motivation for setting up a trust may have a lot more to do with estate protection, helping a charity, and more, but you also may want a safety valve that allows you to pull money out of trust if your circumstances change in any way.
You begin to see that setting either kind of trust is a complex legal matter that has far-reaching effects. Each situation is different, and all the pertinent details must be analyzed to make sure your wishes are clearly laid out. Consulting with an experienced Georgia estate planning law firm is the only way to ensure that you navigate this complex issue correctly and obtain the goals you want to follow in your death.
What Are Some More Details On a Revocable Trust?
Your estate planning lawyer will often point you to revocable trusts, especially living trusts, as they’re considered to be one the best means to avoid probate. By placing your property into a revocable trust, you can still have complete control over the property. Accordingly, because none of your property is now in your estate, and the trust holds all, your estate doesn’t have to go through the probate process because your probate estate is now empty. When you avoid probate, you avert costs, put off any lack of privacy, and bypass other disadvantages of the probate process.
Also, as a situation may change, your estate planning lawyer needs to ensure that everything you own is held in trust form. So, every time you purchase a new property, open a new brokerage account or make any type of change to your estate’s holdings, you need to transfer it into your trust.
The Georgia probate court will oversee the property in your probate estate, and there will be no secret maneuverings, etc. With the court’s supervision, part or all of your estate held in trust or other non-probate forms may have problems. This is especially true if someone close to you may act unethically.
Once again, the Advice of an estate planning lawyer will prove invaluable to making sure your wishes are followed correctly.
Are There Any Circumstances That allow an Irrevocable Trust To Be Changed?
The answer to this question usually is, ” No, it cannot.” Simply by definition, an irrevocable trust is just that; irrevocable. It usually cannot be amended, modified, or revoked after forming.
As the saying goes, though, “there are exceptions to every rule,” and some of these are:
- Trustee, beneficiary, or Judicial Modification – Some irrevocable trusts are written with instructions to trustees or beneficiaries, allowing the trust agreement’s terms to be modified under particular and limited circumstances.
- Exercise of a Power of Appointment – If the trustee or the beneficiaries of the irrevocable trust have been given a lifetime “power of appointment,” the terms of the trust may be changed for the benefit of current or future beneficiaries.
- Disposition of Trust Property – For example, the sale of all the property held by the trust can effectively cause it to be terminated. The trust would still exist, but it would serve no legal or valuable purpose.
This is another area where the professional and knowledgeable estate planning attorney, familiar with Georgia’s trust laws, will be invaluable in determining if anything can be done to change your otherwise irrevocable trust provisions.
If I Do Need To Set Up a Trust In Georgia; How Should I Proceed?
These two types of trusts discussed above are certainly the most common types of trusts formed. However, many more complex trusts are beneficial in certain situations, such as generation-skipping trusts, qualified terminable interest property trusts, qualified personal residence trusts, credit shelter trusts, irrevocable life insurance trusts, etc.
The main point is to protect your estate and ensure your detailed and exact wishes are conducted after your death or incapacitation. Consulting and working with a professional, expert, and empathetic Atlanta or Roswell estate planning law firm is your only way to ensure this is done. Consult with them immediately, and make sure your estates, and your families, future is financially sound.
