One of the questions we commonly hear at Siedentopf Law relates to trusts and probate. Our clients want to know “if I create an irrevocable trust, will it avoid the probate process?” The answer is YES.
Dangers of Irrevocable Trusts
There are three main types of trusts: a testamentary trust, a revocable trust, and an irrevocable trust. An irrevocable trust is a trust with terms and provisions that cannot be changed or terminated until the purpose of the trust is complete. Once the grantor* creates the trust and places property in it, that trust cannot be amended and the property cannot be removed. The assets become the legal property of the trustee* to hold for the beneficiaries. (This is different from a revocable trust, where the grantor can change the terms or the property at any time). In Georgia, most trusts are presumed to be irrevocable unless the estate planning instrument states otherwise.
Benefits of Irrevocable Trusts
So, if irrevocable trusts have such limited options, why are they so popular? An irrevocable trust is a valuable tool because it avoids the probate process. When a grantor places property into an irrevocable trust, he or she no longer owns those assets. It is then the trustee’s responsibility to distribute the property according to the terms of the trust. By avoiding probate, the beneficiaries can keep this process private. They do not have to go through the probate court system, which also saves them time, stress, and money. In addition to avoiding the probate process, the irrevocable trusts protect the assets from creditors and lawsuits. It removes the property from personal income tax and gift exemptions — meaning the beneficiaries may be able to avoid estate taxes on the property. (Revocable trusts also avoid probate, but do not have all of the same tax and asset protection benefits).
Use Irrevocable Trusts Sparingly
While an irrevocable trust can be beneficial for the grantor and those ultimately receiving the property, these trusts should be used sparingly! Irrevocable trusts are very detailed and complicated and should not be attempted without the advice of an estate planning attorney. You want to make sure that everything is correct and according to your wishes before putting those permanent terms in place. If you have additional questions about trusts or probate, please contact Siedentopf Law at (404) 736-6066 or via our online form.
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*Grantor: person who creates the trust
*Trustee: person given the legal authority to administer the trust
