What Can A Trust Do?
A trust is a private agreement between the grant or trustee for the benefit of the beneficiary. It’s a contract. I am agreeing to hold this property for the benefit of this person, and you are giving me the rules about it. I owe a fiduciary responsibility to that person what I do with this asset. That’s what a trust is. Some people think it makes a little bit more sense if you think of the trust as a business. Under the law and the way the law looks at it, it is not a separate legal entity. Many people can think of it better if they think of it as setting up a business. You are going to transfer assets to protect that business, and the business is to protect that child with these resources. That is what a trust can do. In Georgia, the grant or the trustee or the beneficiary can all be the same person. I can set up a trust for myself where I’m the trustee and I’m the beneficiary. That is commonly referred to as a Revocable Living Trust. You might want to set up a trust for yourself and transfer your own assets into it and then you are the beneficiary. As far as the law is concerned, you still own everything. If you become incapacitated, however, and can no longer function as the trustee, you are still the beneficiary, but whoever you named behind you becomes the successor trustee. They do not have to go to court to be named the successor trustee; they don’t have to file any reports with the court. They don’t have to file any accountings; they don’t have to ask permission of the court. All of that is contained within the trust document. This is a very powerful tool in case you become incapacitated. Where that can become important in a special needs situation is you’re probably providing a lot of support for your special needs child right now, if you become incapacitated, how is that going to work? How is that going to function, how are your resources going to be used to benefit not only you but your special needs child. One word of warning about a trust though, a revocable living trust, you have to have the right kind of assets that can actually be owned and managed by a trust for it to be effective. If all of your assets or in a 401k or in your home, it’s not as useful. There are still uses for it but its not as useful those assets are not usually transferred into a trust until you pass away. IRAs 401Ks cannot be put into a revocable living trust while you’re alive, they can be put into a trust when you pass away. That all depends on what your particular estate looks like whether this is a viable option for you. Trusts can be established for yourself, that’s what we were just talking about or it can be established for someone else and can protect assets from creditors. What did we call Medicaid? A creditor. We can create a trust for someone else and than we can but all kinds of rules around it, we can’t do it for ourselves. If we could than everybody would own everything in trusts and creditors would never get paid. We can’t do that, but we can take your money and leave it for someone else and their creditors cannot get at it. Your creditors can still get at it, their creditors cannot. Medicaid is your child’s creditor.
Nadler Biernath LLC assists clients in the Atlanta, Georgia area and throughout Georgia including Kennesaw, Alpharetta, Roswell, Marietta, Buckhead, Johns Creek, Duluth, East Cobb and Dunwoody.