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Trusts, estates and tax reform

Georgia residents can include trusts in their estate plans to ensure that assets are distributed in a certain way. With the passage of the Tax Cuts and Jobs Act, it is important that individuals who do use trusts are aware of how the trusts can be impacted.

Trusts can minimize estate tax liabilities

Georgia residents who are thinking about the future may find that their estate plans are affected by the increased transfer tax exemption brought into existence by the 2017 Tax Cuts and Jobs Act. While the transfer tax exemption was doubled to $11.18 million per person or $22.36 million per married couple under the law, it has a built-in sunset clause in 2025. If additional legislation is not passed, the exemption will return to its 2017 levels -- roughly half the new exemption amounts. This means that people with substantial estates valued at over $5.6 million may wish to take action to preserve the larger exemption before its expiration in 2025.

Trust distributions could be subject to flexibility

Georgia parents who are setting up trusts to manage the distribution of inheritances to their children often have valid reasons for controlling the flow of money. Whether a will creates a testamentary trust or a benefactor establishes a lifetime irrevocable trust, the terms governing distributions fall into the categories of discretionary, mandatory or event-driven. Mandatory distributions or those triggered by events like marriage or graduation can be hardwired into the terms of a trust. Such terms exert specific control, but benefactors have the option of building in flexibility with discretionary terms.

Trust strategies for supporting people with special needs

Families in Georgia that include a person with special needs must consider that individual's long-term welfare and maintenance. The direct assignment of an inheritance to a person born with disabilities or who was disabled by an accident or disease could likely interfere with government benefits. Generally, someone cannot possess over $2,000 to qualify for Supplemental Security Income. Special needs trusts supply solutions to this problem.

Interest rates can affect trust decisions

When people in Georgia make plans for their assets, trusts are an important tool that can help them plan for the future while providing ongoing income and benefits. The ongoing increase in interest rates, however, could cause people to make some changes in how they determine what kind of trusts to use. For the past 10 years, low interest rates have been a constant, and now that rates are rising, planning advice about trusts can also make a change.

Protecting a business with estate planning

Estate planning can be important for everyone who wants to protect their family's future, but it can be especially so for Georgia business owners. In fact, an estate plan can help them to protect the future of their family as well as their business and those who rely on them. By dealing clearly with future plans for the business, a business owner can help to set up a framework that benefits employees, customers and other stakeholders.

About dynasty trusts

Georgia residents who have significant wealth may want to consider using a dynasty trust as part of their estate plan. A dynasty trust is unlike the majority of other types of trusts in that it does not expire. It can be opened in a select number of states.

The reasons some estate plans fail

According to a report from BMO Wealth Management, 40 percent of parents never have an estate planning conversation with their children, and fewer than one-third of adults reported knowing any details of their parents' estate plan. Only a quarter of adults said their spouses knew where they kept estate planning documents, and 40 percent of people who had lost their parents said they found the estate plan to be unfair. However, there are steps Georgia residents can take to better prepare family members.

The advantages of a corporate trustee

People in Georgia might want to use a trust in an estate plan for a number of reasons. A trust can be used to minimize taxes on assets. With a trust, a grantor can also place conditions on how assets will be distributed. This may include specifying whether distributions will take place over time or tying them to specific conditions such as milestones in the beneficiary's life. The grantor may also use the trust to state what its purpose is.

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