A Guide To Irrevocable Trust in Georgia
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What Is Irrevocable Trust in Georgia?
Looking to set up an irrevocable trust? Perigon Legal Services can help get one. Book a free consultation call with us today.
Author: Stan Faulkner, Founder, Perigon Legal Services, LLC
Mr. Faulkner is an experienced counselor and litigator with 15 years of experience, having held bar licenses in four states (Mo, Il, Ct and Ga). Stan Faulkner uses this experience and focuses his skills in the pursuit of assisting individuals in probate (trust and estate) matters, guardianships and conservatorships, estate planning, business disputes and contract disputes. Published on August 22, 2023.
Irrevocable trusts are trusts that you cannot change, terminate, or amend. When you set up one, you give away control over the assets placed under it to the trustee who manages it.
An irrevocable trust allows people to minimize estate taxes and shield their assets from creditors, making it a vital part of estate planning.
Experienced attorneys at Perigon Legal Services are just a click away if you want to set up an irrevocable trust now.
Irrevocable Living Trust vs. Revocable Living Trust
The most obvious difference between revocable and irrevocable trusts is the ability to amend them. Irrevocable trusts are unchangeable and cannot be altered, whereas revocable trusts can be amended, changed, or terminated.
Irrevocable and revocable trusts are also different tax-wise.
Irrevocable trusts protect the income generated by the trust assets from estate taxes. As the grantor no longer owns the assets under an irrevocable trust, they are removed from his or her taxable estate. The grantor is also no longer required to pay income tax on the trust assets. This type of trust also comes with some government benefits.
A revocable trust, however, remains under the grantor’s name and control until their death, which means all trust assets count toward their taxable assets. With the grantor’s death, the trust becomes irrevocable and will be managed by a successor trustee.
If you haven’t yet decided which estate planning tool to choose, our guide to estate planning may help.
Types of Irrevocable Trusts in Georgia
There are different types of irrevocable trusts, including the following:
Bypass Irrevocable Trust
A bypass irrevocable trust, also known as a family or AB trust, allows couples to avoid federal estate taxes on certain assets by moving the late spouse’s estate share into an irrevocable trust. The bypass trust protects the deceased spouse’s assets from creditors and ensures the correct transfer of the assets to the trust beneficiaries upon the surviving spouse’s passing.
Generation-Skipping Trust
A generation-skipping trust, also called a dynasty trust, allows families to pass tax-free assets to their grandchildren. It is called the generation-skipping trust because it skips the grantor’s children and passes the assets along to a later generation. The skipped generation can still receive income from the trust property.
Grantor-retained Annuity Trusts (GRATs)
A GRAT allows a grantor to temporarily lock part of their assets in a trust. This helps a grantor freeze their asset’s value and reduce the asset appreciation. It also helps them transfer wealth to their heirs with minimal gift or estate tax liability. The trust pays the grantor an annuity during a GRAT term.
Spendthrift Trust
The spendthrift trust gives the trustee full control over the trust property to decide how the beneficiaries may use the assets. This type of trust is usually used when the beneficiary is unable to make healthy financial decisions. Spendthrift trusts also protect the beneficiary’s assets from creditors.
Advantages and Disadvantages of Irrevocable Trusts
When you set up an irrevocable trust, you will enjoy the following benefits:
Tax Avoidance: You can reduce your tax liability when you move your taxable assets to an irrevocable trust.
Asset Protection: Irrevocable trusts protect assets from divorce settlements, creditors, and judgments.
Beneficiary Protection: Irrevocable trust beneficiaries cannot be removed or changed under any circumstances.
The Disadvantage of Irrevocable Trust
The downsides of establishing an irrevocable trust include the following:
Loss of Control: You no longer control the assets once they enter the trust.
Irrevocability: Life happens, and you may realize that you need to modify your trust agreement. With an irrevocable trust, you must seek court approval to make any changes.
The Three-Year Rule: If you pass away within three years from the date you set up the irrevocable trust, the assets under the trust will remain in your taxable estate, and your beneficiaries will still have to pay taxes.
How to Set up an Irrevocable Trust in Georgia?
To set up an irrevocable trust, you need to:
- Decide what assets to put under the trust and who will be your qualified beneficiaries.
- Choose and designate a trustee or personal representative.
- Draft the trust agreement.
- Transfer the assets into the trust and surrender ownership to the trustee.
Creating a living trust can be complex and require legal and financial knowledge. You may want to seek the help of a qualified Georgia lawyer to help you in the process.
Do Irrevocable Trusts Avoid Probate in Georgia?
Yes, an irrevocable trust can avoid probate in Georgia because the grantor no longer owns all assets under the trust.
Why you Need to Work with an Estate Planning Attorney
A well-thought-out estate plan safeguards your and your family’s hard-earned property. With the help of a knowledgeable attorney, you will not have to worry about the legal aspects of estate planning.
A professional estate planning lawyer can help you choose the right trust type for your family and draft a watertight trust agreement that reflects your wishes.
There are several asset protection strategies that can help you prepare for your family’s future after you pass on. An estate planning attorney will lay out your options based on your unique circumstances and needs.
Do you want a practical irrevocable trust plan that’s specifically tailored for you and your family members? Consider working with an estate planning attorney who is familiar with Georgia law.
Perigon Legal Services Can Help You
Are you ready to set up an irrevocable trust to take advantage of the tax and government benefits? We will be happy to assist you.
Our attorneys at Perigon Legal Services can advise you on the irrevocable trust that accommodates your wishes and help you set it up. Schedule a free consultation today.
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