Trusts are legal arrangements that allow a person to transfer property or assets without going through the probate process. A lawyer can help with these arrangements by advising on the best type of trust, explaining how to transfer assets into the trust, and advising on tax issues.
They also assist trustees by providing guidance on their duties and responsibilities. This includes handling any disputes and ensuring that the trust follows Georgia law. Read more.
A revocable trust is a way to transfer personal property, such as money and investments to a person or entity that manages the assets for the benefit of another person. It can be revoked at any time by the person making it (known as the grantor). The grantor may also cancel the trust completely at any time before his or her death. If this happens, ownership of the trust assets return to the individual’s heirs.
This type of trust is a great option for people who want to avoid probate. Probate is the legal process for distributing a deceased person’s estate, and it can be long and costly. Using a revocable trust can save beneficiaries the expense of probate and help ensure that their wishes are followed.
However, it’s important to note that revocable trusts do not eliminate estate taxes. In fact, assets transferred to a revocable trust are still subject to federal and state income taxes, and the trustee must file an annual fiduciary tax return just like an individual. The trustee may also be required to pay any capital gains taxes owed by the trust.
The revocable trust document identifies the grantor, trustee, successor trustee and beneficiaries, and lays out the terms of the trust. The grantor must sign the trust in front of a notary public to make it official. The trustee must then formally change the ownership of assets to the trust (by changing the title to real estate, vehicles and bank accounts, for example). Any assets that are not changed to the trust will be subject to probate.
In addition, the revocable trust must be “funded.” This means that the grantor must use his or her own money to buy, sell or exchange assets in the name of the trust. The trustee then transfers the assets to the beneficiary or beneficiaries. In order to maximize the benefits of a revocable trust, it is best to fund it with assets that are likely to appreciate in value, such as cash and investments.
Unlike the living will, which covers three different stages of life, revocable trusts can be revised at any time during a person’s lifetime. However, the trustee must be careful to remove assets from the trust before a person’s death to avoid any estate taxes.
A revocable trust allows the trustee to distribute funds to various beneficiaries, including children, pets, or others. It can also preserve assets for a disabled child or for financial irresponsible children who may be in troubled marriages or other situations that could cause debt problems. However, revocable trusts do not offer protection from creditors, which is one reason they aren’t as effective as an irrevocable trust. A New York revocable trust lawyer can explain these differences and help clients decide which kind of trust is the right one for them.