What Is a Testamentary Trust in Georgia?

Trusts are a strategy widely used by estate planning attorneys to accomplish specific estate planning goals. A testamentary trust is a type of trust that may be used in an estate plan. In this article, our estate planning lawyers at Asset Protection & Elder Law of Georgia explain the nature of a testamentary trust and the reasons why an individual may consider including one in their estate plan.

What Is a Trust?

A trust is a legal arrangement created in a written legal document executed by the grantor (creator) of the trust. The trust document (or simply the trust) establishes the terms that govern how the trustee, who is designated in the document, operates and administers the trust. Beneficiaries named in the document receive benefits as described in the trust document.

The contents of the trust document are extremely important, especially since there are many different types of trusts. The details in the trust document determine the type of trust, whether the trust is revocable or irrevocable, and which federal and state laws apply to operation of the trust. A trust should always be established with help from an estate planning lawyer, because of the complexity of legal issues.

Testamentary v. Inter Vivos Trusts

One way of categorizing a trust is according to whether it is an inter vivos (living) trust or a testamentary trust. A testamentary trust is created as part of a will (last will and testament) or by a trust document but is not funded until after the testator’s (grantor’s) death. In contrast, a living or inter vivos trust is created and funded during the grantor’s lifetime.

Both types of trusts have advantages and disadvantages. Talking about your estate planning goals with a knowledgeable estate planning lawyer is the best way to determine whether an inter vivos or testamentary trust is a suitable choice for your estate planning goals.

Testamentary Trusts

A testamentary trust is created during the probate process used to validate the will after the death of the testator, which provides control over the distribution of assets after death. A testamentary trust is often used for minors or young adults, since the trust can be tailored to specific needs or events, such as setting age thresholds or other conditions that apply to distribution and use of the assets. For families with members who have special needs, a testamentary trust may protect income and assets without jeopardizing eligibility for benefits.

In addition, individuals with high net worth and charitable and philanthropic goals may find a testamentary trust beneficial for asset distribution and minimizing estate taxes. Every situation is unique and must be evaluated by a knowledgeable trust attorney before determining what structure is best for all the estate planning goals of the individual and what type of trust may accomplish specific goals.

Testamentary trusts may be used in a wide range of other situations, to address many different needs and concerns. The delayed effectiveness of a testamentary trust provides the testator / grantor with the opportunity to make changes in the trust, or even revoke the trust, if circumstances change before the grantor’s death. However, one drawback of a testamentary trust is that it goes through the probate process, so the details about the trust and assets are a public record, unlike a living trust that avoids probate. An inheritance trust created through an inter vivos trust does not go through probate. Only testamentary trusts created through a will must go through the probate process. Your estate planning attorney addresses this concern and others before you make a final decision about the structure of your estate plan and trust.

As you go through the estate planning process, our lawyers at Asset Protection & Elder Law of Georgia provide in-depth counsel and advice about the most appropriate estate plan structure for your needs. We draft a will and other estate planning documents that incorporate your financial situation and goals. If the estate includes a trust, we explain how the trust interacts with probate, taxes, and government benefit programs. Whether you are a parent, spouse, or caregiver, our attorneys ensure that your wishes are honored and that your beneficiaries are protected.

Get Help From an Experienced Georgia Trust Attorney

Our Cartersville estate planning practice at Asset Protection & Elder Law of Georgia focuses on helping clients identify and accomplish their estate planning goals by determining the right approach for their personal and financial circumstances. If a trust would be beneficial for your estate plan, we can help you establish a trust to address your specific needs.

We serve clients throughout the communities northwest of Atlanta, including in Bartow County, Cobb County, Cherokee County, Gordon County, Floyd County and Paulding County. To schedule a consultation, contact us through our online form.