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What Are The Different Kinds Of Trusts & Do I Need A Lawyer To Create One?

Jul 17, 2023 | Estate Planning

Trusts are an important legal tool that can shield your hard-earned assets and property. Unfortunately, most people believe the misconception that trusts are only for the elderly or the rich, which simply isn’t true. A trust is for any person who has something of value, and it protects the things that matter most. Still, many will put the task off for “another day,” but that day sometimes doesn’t come. Since tomorrow is never promised, it is important to protect your assets now. A trust can shield them from risks like creditors and lawsuits, but it can also prevent your family from having to go through the probate process after you pass away. 

Probate is a Georgia court process that has to take place when a decedent doesn’t have a will at the time of their death. It is a lengthy process that can take anywhere from 6 months to a year to complete, and it has to take place before the decedent’s assets can be distributed to beneficiaries. Probate can be rather expensive and it will likely deplete a large sum of the assets that are intended for your loved ones. A trust will eliminate the need for this to occur, saving your family from financial jeopardy and hassle during an already difficult time. 

While making a trust that clarifies your wishes for your assets can feel overwhelming, it’s necessary if you want them to end up with the right people. Because every individual needs something different from a trust, there isn’t a one-size-fits-all formula when it comes to creating one. There are several different types of trusts intended for different purposes, each offering unique advantages and considerations. If you’re unsure which trust is best suited for your needs and whether you require the assistance of a lawyer to establish it, you’re not alone. 

Revocable Trusts vs. Irrevocable Trusts

Before exploring the details of the different trust types, it’s important to understand the two main categories: revocable trusts and irrevocable trusts.

A revocable trust allows the creator to update or modify the terms of the trust as they see fit, whenever they believe a change needs to be made, unlike an irrevocable trust that, once established, cannot be altered. There are pros and cons to an irrevocable trust, one pro being that once it is created it has a layer of protection that cannot be broken, but the con being that it cannot be changed if needed. Below are the various types of revocable and irrevocable trusts.

Testamentary Trust

This type of trust is a part of a last will and testament. It allows you to designate beneficiaries and a trustee who’ll manage the assets on your behalf. The trust itself outlines when assets will be distributed to beneficiaries and it goes into effect after you (the grantor) pass away. 

Charitable Trust

A charitable trust allows you the ability to donate to a tax-exempt charitable organization which in turn can help you minimize what you might owe to the government. They can also be used to provide a trustworthy income stream for you and your family for a set amount of time. 

Special Needs Trust

A special needs trust is set up to provide for children or family members with disabilities, while also ensuring they stay eligible for public benefits like SSI, Medicaid and more. There are three different kinds of special needs trusts: first-party trusts, third-party trusts, and pooled trusts. A first-party trust is ideal when an individual with special needs has assets that might disqualify them from receiving public benefits. A third-party trust is set up by a donor for them to contribute gifts and other things that public benefits don’t provide for an individual with special needs. A pooled trust contains the assets of multiple people and administers a large trust on behalf of several special needs beneficiaries. 

Asset Protection Trust

An asset protection trust is an extremely important legal tool to have, especially if you’re a business owner. It can help you safeguard the wealth that you’ve worked hard to build as it serves as a shield for your assets from creditor claims, lawsuits, bankruptcy and other liabilities that could deplete what’s yours. 

Joint Trust

A joint trust is a single trust that is shared by two people, typically a married couple. In most cases, both spouses share control of the trust while living, and when one spouse dies the other automatically becomes the sole owner of the trust and the assets inside of it. 

And more!

Do You Have To Work With A Lawyer?

If you’re considering creating a trust, it is likely that you’ve come across some “DIY templates,” online throughout your search for more information. While the idea of leaving a lawyer out of planning your trust and utilizing an online template might have the appeal of convenience and even cost, it is not a reliable route to creating a proper trust. This is because these templates often lack the language they need to make them legally compliant and effective. Even if they are legally compliant, it can still be easy to make mistakes on paperwork when you’re working with a digital download, rather than an attorney who’ll get to know you and your needs personally. That’s why it is always better to enlist the help of a skilled trust attorney who is familiar with Georgia’s trust laws and can help you choose which one is right for you. 

How Fouts Law Group Can Help You

If you’re considering creating a trust, it’s crucial that you do so with the help of our experienced trust attorney, Jeff Fouts. He has 30+ years of experience helping clients establish trusts that safeguard their assets and their loved ones in the long run. He’s also very familiar with the different types of trusts and can recommend which one will best suit your individual needs. Call today to schedule a free consultation and learn what Fouts Law Group can do for you! 

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