The differences between an inheritance and a trust lie mainly with the tax-related benefits inheritances have gained over the years. With the lowering of tax rates and more exemptions, the advantage of the inheritance can outweigh the hassle and expense of the creation and administration of trusts for Georgia residents. However, financial professionals still view trusts as excellent financial vehicles.
With the taxes on capital gains and income, the favorability of trusts has waned somewhat. Assets such as real estate properties and stocks that are allocated through a trust do not receive the advantage of a cost basis. The funds received from a trust are also taxed higher than an inheritance.
Trusts are still excellent for administering the wealth and property of families and certain institutions, especially for those who prefer a hands-on approach to managing assets for current and future beneficiaries. It allows the calculated disbursal of funds to whom the owner chooses and in the manner they choose. This can be particularly beneficial for those who have substantial wealth that they want to give to their beneficiaries in a safe and responsible way.
An important part of establishing a trust is the preparation. This includes having a clear idea of the purpose of the trust. One should also be aware that there are various types of trusts that are best suited for different financial situations and with certain types of assets. A financial advisor who can help with determining the effects of different financial scenarios as well as who will manage the trust should also be given serious consideration.
Trusts are still effective tools for managing assets. If there is a question about what type of trust is appropriate for a situation, an attorney who practices estate planning can offer advice.