Estate planning can be confusing for Georgia residents, and the process is filled with terms that are unfamiliar to many people. One of the most common terms involving trusts is settlor, which is often confused with settler but has an entirely different meaning.
The settlor of a trust is simply the person who creates it. This is accomplished by first establishing the terms of the trust in a legal document. Then the settlor funds the trust by transferring property into it. The role of the settlor may end after he or she funds the trust, but this depends on whether the trust is revocable or irrevocable.
A revocable trust is a living trust in which the settlor is usually also the trustee. The settlor usually has rights regarding the changing or terminating of the trust. If the settlor becomes unable to manage the trust, there are usually provisions that allow for the transfer of control to a successor trustee.
An irrevocable trust is usually one that a settlor sets up for someone else. The settlor of an irrevocable trust has no actual right to make changes to the trust after it is created, though he or she may have practical influence in its management of the trust.
A trust provides asset protection by setting aside property for someone’s heirs. The assets that are placed in an irrevocable trust are no longer considered to be part of the settlor’s estate, so they not subject to probate. A testamentary trust differs from a living trust and is part of someone’s will, and therefore only goes into effect after the death of the owner of the assets. An estate planning attorney can describe other benefits that a trust can provide.