Many people tend to procrastinate when it comes to making arrangements for how to divide up their property after they pass away. This can be because the thought of passing away is unpleasant to them. Or maybe they believe setting up such a disposition will be a lengthy, tiresome chore that they do not feel like dealing with. Or it can simply be that the process is confusing to them, and they are unsure of the best way to dedicate their belongings. If the latter, this article is meant to provide some guidance on the process by helping you choose between a will and a living trust to dispose of your property.
Living trusts and wills are set up differently depending on the U.S. state in which you’re currently residing. The information presented here regards the particulars of Georgia-specific wills and living trusts. See Title 53 of the Georgia Code – Wills, Trusts, and Administration of Estates. It is always recommended to consult with an experienced estate planning attorney attorney when planning and creating a will, living trust, or any other legal documents.
Do I really need a will or living trust?
Yes. Generally, it is a good idea for everyone to have a mechanism in place for disposing of one’s property (this is true regardless of whether the value of your assets is large or small). One reason for this is because such a mechanism can help prevent family conflicts from erupting over the distribution of your assets. With a valid will or living trust in place, a court can much more easily settle any legal battle that ensues between individuals disputing the allocation of your assets. Another reason people often want to have a will or living trust in place is because it gives them control over how their property is distributed upon their death. If no will or living trust exists, then the property falls into intestacy which means the state will decide how to distribute the property.
The terminology and legal jargon of estate planning.
Legal jargon can be intimidating. Here are some of the key phrases explained:
- The executor is the person you put in charge of distributing your property after your passing when dealing with a will.
- Trustees are essentially the same as executors, except for a living trust instead of a will. The main difference is that when you create a living trust, you can name yourself as the trustee until your passing.
- Assets are the pieces of property that you own and would like to distribute.
- Probate is the official proving of a will.
- Probate assets are assets that would be under the jurisdiction of the probate court if one were to leave a will.
- Debts and taxes are any amounts one’s estate might need to pay out upon death.
- Beneficiaries are the people you want to receive your assets.
What is a Will (aka Last Will and Testament)?
A will is a written, personal document that provides your instructions for how you would like to distribute one’s belongings after death. Although a will is a legal document, one does not need the presence of a lawyer in order to set up a will; in fact, depending on state restrictions, there are websites where one can create and maintain an updated will entirely online. However, it is recommended to have an attorney assist you in making a will to help you abide by state restrictions and laws. Otherwise, you run the risk of creating an invalid will which cannot be used to distribute property.
What is a Living Trust?
A living trust, like a will, is a written, personal document that provides your instructions for how you would like to distribute your belongings after death. However, living trusts are considerably “stronger” than wills in the sense that living trusts are completed and signed in the presence of a notary, funded by the transfer of assets, and supported by a trustee when you pass away.
There are two types of living trusts: irrevocable and revocable. Irrevocable living trusts are unchangeable. Once assets are placed in an irrevocable living trust, they cannot be transferred, so it is important to be clear on whether you want your trust to be irrevocable. See Dismuke v. Abbott, 217 Ga. App. 524, 457 S.E.2d 837 (1995). Revocable living trusts are far more common because they avoid this kind of permanent engagement; you are allowed to edit or even nullify a revocable living trust over the course of your life.
Advantages of a Will
- Wills are generally more simple, inexpensive, and legally unbound than living trusts. Living trusts are more formal documents that vary in cost depending on the complexity of your personal situation.
- Georgia is a state with a relatively simple and inexpensive legal system, so having to undergo the probate court system is not terribly difficult relative to most states.
- Wills do not have to be actively managed. Trusts, on the other hand, must be actively managed by a trustee once they are created.
- Wills do not have to be funded to remain effective. Trusts require funding and a placement of assets to be an effective trust.
Advantages of a Living Trust
- Creating a living trust enables one to bypass the tedious probate court proceedings that are necessary under a will. Under a living trust, assets are distributed immediately upon death by the trustee, and families don’t have to pay the costs of an attorney. In this manner, a living trust may actually save you more money than a will would.
- Although living trusts are more formal, expensive, and difficult to create, wills do not have the same ability as living trusts to establish provisions for niche, important cases. For example, assets in a living trust are protected from a surviving spouse if you would wish to disinherit him or her. Wills do not have this kind of legal protection.
- Living trusts better maintain the privacy of your financial affairs. While wills become a part of the public record upon your death, a living trust does not because courts are not involved unless the terms of the trust are disputed.
Leveraging the Advantages of a Will and Trust
Fortunately, you are not limited to having only a will or only a trust. A person can have a will to distribute some or all of their property, and even have the will give all their property to an existing trust, or a trust that will become effective upon their death (commonly called a testamentary trust). A will that puts all a person’s assets into a trust is commonly called a “pour over trust.” It is not uncommon for someone to use a will to distribute their more personal types of possessions to specific friends and family members and to use the will and trust to manage the more larger financial and real property assets. In any event, a person can choose to have only a will or only trust, or both. Because of the complexity in choosing what is best for a specific situation, it is advised that most people speak with an experienced estate planning attorney before making any final decisions.
Obtaining help with your Trust and Will
The decision to create a living trust or a will is an exceptionally personal one that should not be made alone. Our highly experienced attorneys can help you make the best choice for your personal, legal, and financial situation. If you have any concerns or doubts about the decision, or if the information is still unclear, call 770-609-1247 to have a helpful discussion with one of our probate attorneys today. Contact >