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Duluth Georgia Estate Planning Legal Blog

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.

Estate plans do not last forever

Estate planning is not always easy in Georgia. While some people may have complicated assets, others might need to ensure heirs get their share of an inheritance. However, one problem is more universal. In general, estate plans are often not updated when they need to be.

During a conference for the 45th Annual Notre Dame Tax & Estate Planning Institute, financial advisers frequently reported that clients did not keep up to date with estate planning. This could be due to a misconception that no changes are ever necessary. However, there are many events that could warrant revisiting wills, trusts and other estate planning documents.

Three estate-planning tips for couples without children

Couples without children in Georgia and other states do not have the same concerns as couples with children when it comes to estate planning, but they still must plan ahead. They likely want their assets to go to charities or educational or religious institutions upon their death as opposed to them being divvied up by the state.

It is estimated that more than 60 percent of people do not have a will. This is a crucial document that determines where a person's property goes if they die. It is important that couples without children make their wishes known. This is essential to ensure the couple's distribution of property matches their desires.

What to know about special needs trusts

Parents of special needs children in Georgia and throughout the country face a variety of obstacles raising their sons and daughters. One of the challenges that they face is ensuring that there is enough money or other resources to provide the care that they need. It is not uncommon for special needs individuals to rely on Medicaid or other government programs to provide some of those resources. However, there are income or asset restrictions that participants in those programs need to abide by.

Generally speaking, assets inside of a trust are counted as resources. This is true unless a participant is the beneficiary of a carefully crafted special needs trust. To qualify, it must be an irrevocable trust with only a single lifetime beneficiary. It is important that anyone who wants to contribute to the trust understand how to do so properly.

Administrating a loved one's estate: some challenges

Georgia residents may have decided to take on the role of executor of a deceased loved one's estate, in which case they will need to know what sort of challenges they will face. First, an executor is in charge of identifying the estate's assets, paying off debts, filing tax returns and distributing the estate to the heirs and beneficiaries.

Executors need to find out if the estate will have to go through probate. They will also need to address any complaints that may be made by unreasonable heirs. Copies of the death certificate will be required for certain tasks, so executors need to obtain these.

What is the top requirement for the executor you choose?

Perhaps you are mulling over the idea of meeting with an attorney to draft your will but trying to decide who to name as your executor is slowing you down.

Think in terms of responsibilities. What is the top requirement for the person who administers your estate after you pass on?

The advantages of trusts over wills

Individuals may be able to benefit from having both wills and trusts in their estate plan. However, it is important for Georgia residents and others to understand the key differences between the two estate planning tools. If an asset is controlled by a will, it will have be distributed under the guidance of a probate judge. If an asset is controlled by a trust, there is no need to go through probate.

This may be ideal for those who are looking to transfer assets in a timely and affordable manner. Of course, it is important to note that the cost of creating the trust itself is generally higher than the cost of creating a will. As the terms of a trust are not made public, it is harder to challenge a trust than it is to challenge a will.

Adding a will to a trust-based estate plan

Georgia residents who wish to have more control over how their estates will be administered may choose to use trusts. Placing assets into trusts allows estates to avoid the probate process, but these benefits are only available if trusts are properly funded. When the grantor of the trust neglects to transfer all of their assets into the trust, a trust-based estate plan can be vulnerable. If there is no will in place, the assets that have not been transferred into the trust become probate assets. This means that the trustee will have no control over them, and they will be distributed according to state law.

This is why drafting a specific type of last will and testament may be a prudent step to take for individuals with a trust-based estate plan. What is known as a pour-over will is essentially a catch-all safety net for trust-based estate plans as it lists the trust as the beneficiary of any assets it does not already contain.

Court decision on rights of contingent beneficiaries

Georgia is not one of the states that has adopted the Uniform Trust Code. However, a person who is creating a revocable trust with contingent beneficiaries should still be aware that those contingent beneficiaries may have rights in some circumstances. Traditionally, revocable trusts have been used to allow the settlor, or creator, to keep control of the property in the trust. However, this might not always be the case.

In some other countries and some U.S. states, contingent beneficiaries may have rights. This was the finding of the Michigan courts in a case that involved a woman who became incapacitated. At that point, her husband took the role of successor trustee. He then sold the part of the trust that was the family business to the couple's son. Their daughter challenged this and sought for her father to be removed as successor trustee.

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