Trusts are often used as an estate planning tool in Georgia, South Carolina, and other states. Here are some strategies to consider in using a trust to plan for your incapacity.
Create a trust and transfer assets now
Create a trust and transfer your assets into the trust now, naming yourself as the initial trustee. So long as you are still able, you continue to manage trust assets. The terms of your trust provide for transfer of management of your assets to a successor trustee if and when you become incapacitated. Your trust names successor trustee(s) and specifies the procedure for determining if you are incapacitated. You can include safeguards in the trust to protect against overeager successor trustees who may be interested in taking control while you are still capable of handling your own affairs.
The successor trustee could be a trustworthy (and financially savvy) family member, or you can name a bank trust department or trust company. Sometimes, individuals are named as co-trustees with a corporate trustee. Trusts are very flexible instruments that can be tailored to your specific wishes, needs, and concerns. You can amend your trust as needed after you create it to accommodate changing life circumstances and objectives.
If you have a trust, you should understand its purpose and the fundamentals of how it is designed to work. You should know what assets are currently owned by your trust and the rationale of why. If you are uncertain about these things, you should consult with a qualified estate planning attorney about your trust.
Create a trust now and transfer assets later
If you don’t want to transfer your assets into the trust immediately, you can create the trust now but not fund it. An accompanying power of attorney can enable, or instruct, your attorney-in-fact to transfer your assets into your trust for management in the event you become incapacitated.
Whether you plan for your possible future incapacity through powers of attorney or a trust or a combination thereof, it is most helpful to plan in advance. Otherwise, if you become incapacitated, it is likely that someone will have to file a petition with the Georgia or South Carolina Probate Court to be named your legal guardian and/or conservator. Court supervision of any conservator would be required by law, and there would be additional ongoing expenses such as filing regular reports with the Court and seeking the Court’s permission to spend your funds to take care of you. Having your trust in place can avoid this altogether and give you much more privacy.
Who should be appointed trustee?
It is important that you give serious thought to who you might name as your successor trustee. Do not name individuals likely to mishandle the responsibility. Trusts frequently waive safeguards that a Court would impose on a conservator, such as posting a “security bond” which would protect against misappropriation of trust assets. Sometimes, even well-intentioned family members might be inept at handling your finances. You may conclude that naming a corporate fiduciary as your successor trustee is your best available option.
A qualified Georgia or South Carolina estate planner should work with you to prepare your trust and any amendments. Together, you can conduct a thoughtful review of your financial and family circumstances to design an estate planning strategy just for you.
© Karen S. Hindson, Hindson & Melton LLC October 13, 2013