While trusts can be helpful for those in Georgia who are looking to take advantage of the new estate tax rules, this isn’t always the case. As a general rule, trusts should not be setup for grandchildren as there could be other ways to help them. Financial advisers may first want to determine if a person would want to access funds or other assets given away to children or grandchildren.
If the answer to that question is yes, it may not make sense to make large gifts. The type of assets a person has may determine whether a grantor or non-grantor trust best fits his or her needs. For instance, trusts looking to take advantage of the new pass-through business entity rules would have to be the non-grantor variety. However, those who have life insurance policies are generally better off with grantor trusts.
An important consideration when creating a trust is where that trust will be located. In some cases, this is the home state of the trust’s grantor. In other cases, it will be located wherever it receives the best treatment. In states such as Delaware or Nevada, a person can create a trust, be the beneficiary and have assets removed from an estate. Creating a trust in a state that has no income tax can also be beneficial.
When creating a trust, an individual may want to consider several variables such as current and future tax implications. It may also be important to consider whether the terms of the document allow a person to control his or her assets into the future. An attorney can often help an individual determine the best way to structure a trust. Legal counsel may also review any trusts that have already been created.