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Duluth Georgia Estate Planning Legal Blog

Why the location of a trust may be important

Those who reside in Georgia may decide to include a trust as part of their estate plans. However, it may be possible to create the document in another state, and many people choose to locate their trusts in Delaware. Delaware is a popular option because beneficiaries who don't live there don't have to pay state income tax on distributions from a trust. Of course, it is possible that a beneficiary will owe taxes in his or her home state.

Delaware is also a popular state for those looking to keep terms of a trust hidden from a beneficiary. With quiet trusts, beneficiaries won't find out about their inheritance until they reach a certain age. In some cases, trustees may be barred from ever telling beneficiaries about the trust. Those who are looking for a relatively easy way to transfer assets from one trust to another may appreciate Delaware's decanting statute.

Important steps to take when crafting an estate plan

Georgia residents and others will ideally create an estate plan that takes care of their needs both while alive and after passing. It is also important that individuals can articulate what their plan does and how it could impact the lives of family members and friends. One of the key issues to consider is how assets will be distributed. In some cases, it may be best to leave them directly to a beneficiary.

However, leaving assets to a trust may protect them from being taken in lawsuit or in a divorce settlement. Assets may be distributed per the terms of a beneficiary designation. This is generally true for money inside of an IRA or the cash value of a life insurance policy or annuity. It is a good idea for a person to review a beneficiary designation regularly to ensure that it truly reflects his or her wishes.

The federal estate tax return timeline

An estate is frozen the moment that a federal estate tax return is received by the IRS. This means that assets cannot be transferred, and other transactions cannot be initiated or completed until the return is accepted. When that happens, the IRS will send an estate tax closing letter indicating that the return has been fully processed and accepted. Georgia residents and others may need to wait several months or years after submitting a return to receive this letter.

It usually takes at least six weeks for the IRS to enter Form 706 into its database. If the return is accepted, it can take up to nine months to receive the estate tax closing letter. Alternatively, the IRS will send notice that an estate is being audited. If an audit occurs, it will typically take up to six months to complete, and in more complex cases, it may take years to complete the process.

Tips for improving an estate plan

Many Georgia adults may lack estate plans, and many of those who do have them could improve them. It is not uncommon for people to have no estate plan or to have an insufficient estate plan whether they are very wealthy or have few assets. Incorporating charitable giving is one way an estate plan can be improved, particularly for wealthy individuals. A charitable remainder annuity trust can provide money for a loved one until their death and then pass what is left to the charity.

Every estate plan should be reviewed periodically, and it can be particularly important to review beneficiary designations. Assets such as retirement accounts are passed using beneficiary designations, but these documents may be forgotten when someone goes through a major life change. This could mean that after the divorce or the birth of a child, the beneficiary designation is out of date, and the asset could pass to an ex-spouse, or a child could be left out. Life insurance is also passed using a beneficiary designation, and it can be an important addition to an estate plan to cover expenses and lost income.

How to overcome estate planning roadblocks

Georgia residents may not like contemplating their mortality. However, creating a thorough plan can make it easier for surviving family members to settle an estate in a timely manner. It may be best to create a list of physical assets and financial assets in the beginning planning stages. This may make it easier for people to inventory their possessions and decide what to do with them.

Breaking the process of inventorying assets into smaller pieces may make it feel less overwhelming to do so. Ultimately, it can eliminate an estate planning roadblock that could prevent a person from drafting a will, trust or other document. Parents and grandparents will need to consider family dynamics when deciding who will get their possessions. It may be a good idea to consider the prospect of a child remarrying or what would happen if a beneficiary were to die unexpectedly.

Georgia's special needs trust types

When you have loved ones with special needs, there are certain times and situations wherein they require additional care and consideration. This is particularly true in regards to their care in the case that a guardian or caregiver passes or is no longer available.

Thankfully, there are programs and services in place to help protect the estate and inheritance of parties with special needs, including special needs trusts. In fact, there are a few different types of special needs trusts to consider.

Potential pitfalls of electronic wills

While electronic wills are not yet considered legally binding in Georgia, several other states have passed legislation that permits them, and Georgia could change its laws in the future. Many younger adults prefer e-wills because they are in line with other services they are able to access online. They seem easier and simpler than a process that involves meeting with an attorney in person. However, there are a number of potential drawbacks.

The process of signing an online will can be done from home. The creator of the will prepares it and then has a video chat with an online notary to whom the will has been forwarded. While this might seem like a streamlined way to get an estate plan in place, it may not allow for addressing some of the many complications that should be dealt with as part of the overall estate plan. Furthermore, people often think they have a relatively straightforward estate and only realize that is not the case after meeting with a professional.

Estate planning issues for stepparents and stepchildren

Estate planning can raise tensions for families in Georgia, especially when blended families with stepparents and stepchildren are involved. Remarriage is perhaps more common than ever before, and people planning for the future may want to consider how they can best balance out the interests of their spouses and their children. This is especially true when two people marry later in life with their own grown children. Many people do not even make a basic will; they may expect to rely on intestate distribution. In other cases, people make a simple will leaving everything to their spouse.

When spouses share their children, this can seem an easy choice for many people, especially if they are also not dealing with substantial wealth. However, blended families may have more to think about. If one spouse passes away and leaves everything to the other, that spouse may be far more likely to will their own assets to their children, leaving the children of the original parent cut out of the picture. These results can occur even in relatively close blended families, especially if people fail to update their wills or do not develop a joint plan after marrying.

Estate planning is changing in the modern world

In previous generations, the typical American family consisted of a married wife and husband living at home with their biological children. However, only about 35% of couples in Georgia and throughout the country today are what would fall under that category of a "traditional family." Therefore, it will likely be necessary for most people to have estate plans that look different than the ones that their parents or grandparents put together.

For instance, those who have adopted a child or had a child out of wedlock could need to specifically include them in an estate plan. In recent decades, it has become more common for individuals to get married for a second or third time. If an individual has biological children from a first marriage, they may need to take action to ensure that the child obtains their inheritance.

Proposed estate tax changes prompt interest in trusts

Georgia residents who have put off drafting an estate plan may now be thinking about taking action due to the estate tax reforms being proposed by several leading political figures. Senators Bernie Sanders and Elizabeth Warren both support slashing exemptions to pay for programs that would expand health care, forgive student loan debt and fund infrastructure projects, which has prompted many people who do not think of themselves as rich to start worrying about estate taxes.

The current estate tax exemption is $11.4 million, but it would be lowered to just $1 million under some of the proposed reform plans. Placing assets into an irrevocable trust limits estate tax exposure, and it may be a prudent step to take even if exemptions are not reduced. This is because trusts do far more than protect against taxes.

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