Irrevocable trusts can be an important component of estate plans. Much of it depends on the purpose of the trust. There are many considerations, however, that must be taken into account before creating one.
At Georgia Estate Plan, our estate planning attorney in Georgia will thoroughly review your needs and wants when planning your estate and provide an outline of your best options, including the creation of an irrevocable trust. Contact us either online or at 770-425-6060 to schedule a Family Wealth Discovery Session ($600 value for No Charge) today.
Understanding Irrevocable Trusts in Marietta
An irrevocable trust is a trust that cannot be changed, amended, or terminated after it is created (with some limited exceptions). By creating an irrevocable trust, the grantor is relinquishing their control over the assets placed in the trust. Irrevocable trusts are administered by a trustee for the benefit of the trust beneficiaries.
Pros of an Irrevocable Trust in Georgia
There are various reasons a grantor may choose to place assets in an irrevocable trust, including:
It is possible to reduce your tax liability by moving taxable assets from your estate to an irrevocable trust. This is typically a more beneficial move for owners of large estates.
Irrevocable trusts provide protection to the assets that they contain. This includes protection from creditors, judgments, and divorce. People employed in highly litigious professions are most likely to use irrevocable trusts for this purpose.
However, there are some limitations to using irrevocable trusts in Georgia, especially when it comes to self-settled trusts. A self-settled trust is a type of irrevocable trust where the grantor is also a beneficiary of the trust. The purpose of a self-settled trust is to protect assets from creditors while still allowing the grantor to benefit from the assets.
In Georgia, self-settled trusts are subject to the Uniform Voidable Transactions Act (UVTA), which was formerly known as the Uniform Fraudulent Transfer Act (UFTA). The UVTA provides that a transfer of assets to a self-settled trust can be voidable if it is made with the intent to hinder, delay, or defraud creditors. This means that if a grantor transfers assets into a self-settled trust with the intent to avoid paying their debts, a creditor could potentially challenge the transfer and try to recover the assets.
Irrevocable trusts are a useful estate planning tool when you are providing for a family member with special needs. These trusts are often referred to as irrevocable special needs trusts, and they allow a beneficiary with a disability to receive funds for their living expenses without that income being used to disqualify them from receiving government benefits.
Cons of an Irrevocable Trust in Georgia
There are various reasons a grantor may choose against placing assets in an irrevocable trust, including:
Loss of Control
If you desire to maintain control over your assets, an irrevocable trust may not be the best choice for you. Changing the terms of an irrevocable trust is something that is not easily accomplished after it has been formed unless all parties (trustee and beneficiaries) are on board.
While the formation of an irrevocable trust may seem like a good idea when it is established, circumstances change, and it may not be the best choice down the road. Even so, you will not be able to easily change the terms to fit your new situation.
Terminating an Irrevocable Trust in Marietta
In limited circumstances and jurisdictions, it may be possible to terminate an irrevocable trust by agreement when all parties, including the trustee and the qualified beneficiaries, agree to do so. Modification or termination of an irrevocable trust may also occur pursuant to a judge's order. Judges are more inclined to make these changes or terminate an irrevocable trust when it is obvious that the purpose of the trust has been fulfilled, has become illegal, or is defeated by compliance with the terms of the trust.
Otherwise, irrevocable trusts will end naturally pursuant to the terms that were established when the trust was created. It is typically dependent upon an event, such as the death of the person that created the trust, or it will end on a certain date.
Contact an Irrevocable Trust Lawyer in Georgia Today
We at Georgia Estate Plan want to help you make the best choices for yourself and your family. To get started on your estate plan, contact our estate planning lawyer today by either using our online form or calling us directly at 770-425-6060. We will help you with trusts, wills, powers of attorney, and other estate planning documents that suit your specific needs.