Wills, Trusts and Probate Estates

By

J. Cale Rogers

Coleman, Chambers, Rogers & Williams, LLP

This article is intended for educational purposes only and is not intended, nor should it be construed to provide legal advice.

Are you one of the many people who believe that upon your death all of your assets will automatically pass to your spouse? Did you know that without a valid Will, the State will determine who acquires your assets upon your death?

Did you know that should you die without a Will and are survived by minor children that the State could determine who is appointed guardian over your children, and the local Probate Court will control the portion of your estate inherited by your minor children until they turn 18 years of age?

Are you aware that if you die without a Will that it is much more difficult for the Personal Representative (or the Executor) of your Estate to convey your assets, and that they will likely be required to have an insurance company post a bond before the Probate Court will confer upon them the authority to act on behalf of your Estate?

Did you know that as an Executor or Trustee of an estate you may be entitled to a commission of up to 5% of the assets of the estate?

The answers to these questions are surprising to many people. Having a valid Will in place can make the administration of your estate much less stressful upon your loved ones at a time and under circumstances which are often difficult and emotionally trying. Most Wills are relatively simple documents that are fairly inexpensive to have prepared. Having a Will in place allows you to determine who acquires your assets upon your death, to name a guardian of any minor children who survive you, and to appoint a Trustee over assets that are inherited by minor children.

The Georgia Intestacy Statute provides that if a person passes away without a Will that his probate assets are divided among his surviving spouse and his surviving children (regardless of whether the surviving children are also children of the surviving spouse), with the spouse receiving no less than a one-third (1/3rd) undivided interest in the probate assets. Under many circumstances, particularly in today's society when blended families have become the rule more so than the exception, the procedure implemented by the State may not carry out the actual wishes of a person who dies intestate (without a Will) with respect to the distribution of his assets upon his death. Unfortunately, many widows find themselves in the unfortunate position of learning Georgia's Intestacy rules for the first time only after the death of their spouse. Having a Will in place can avoid the unfortunate results the Intestacy Statue often imposes.

Another aspect of Estate Planning that is often misunderstood is the function and advantage of having a Trust in place upon your death. While many people mistakenly believe that having a Trust in place will avoid probate and will save the decedent's estate taxes, the primary function of a generic Trust is to provide a mechanism by which the decedent's children's share of an estate is managed by someone who is mature enough to make sound financial decisions on behalf of the children until they are of a suitable age to effectively manager their own money. Many young men and women who have had the misfortune of losing their parents at a young age have benefited from having a Trust in place that effectively safeguarded their money until they became mature enough to handle the management of the same.

There are a handful of specialized Trusts, including the Credit Shelter Trust, that can provide tax savings to large estates. The Federal Estate Tax that is currently in place imposes a tax on that portion of an estate that exceeds 5 million dollars (the "Exclusion Amount"), including the value of any survivorship assets held by the decedent at the time of their death and including any life insurance proceeds paid upon the death of the decedent, regardless of whether the same passes through the decedent's Estate. A cornerstone of estate planning is founded upon seeking to maximize the Exclusion Amount for both spouses. A properly-employed Credit Shelter Trust will qualify for the marital deduction, which will allow the surviving spouse to fully utilize the Exclusion Amount to effectively shelter an additional 5 million dollars of assets upon their death.

For larger estates, there are also other estate planning techniques that can be employed to reduce the estate tax, including utilizing the annual gifting exclusion to gradually reduce a large estate over time, the implementation of a Life Insurance Trust which, when properly employed, can remove the value of a life insurance policy from a deceased person's estate, and the creation of a Family Limited Partnership or Limited Liability Company when a wealthy individual has a large tract of land or a portfolio heavy in real estate. To the extent that you and your spouse have assets that approach the threshold for the estate tax, you would be well served by discussing your estate planning options with an attorney familiar with the same.

Many people believe that they are better off not having a Will in order to avoid probate. There is a general misconception among much of the public that the process is difficult and expensive. In reality, probate is a fairly inexpensive process that is usually completed in a few weeks. However, the probate process is more difficult and time consuming when a decedent leaves behind assets without leaving a Will.

An attorney who is familiar with probate procedures can assist a Personal Representative with the administration of an estate, the payment of creditors, and the distribution of the assets of the estate, and provide advice related to non-probate or survivorship assets. Being appointed by the Probate Court as the Personal Representative of an estate is merely the first step in a process that is oftentimes confusing and misleading. One of the most important duties of an Executor is to determine the priority of distributions and claims against the estate. The guidance of an attorney is essential when there are insufficient assets in the estate to pay all creditors and implement all devises contained in a person's Will. Georgia law sets forth a specific order of priority with respect to claims against an estate. It is important for any Personal Representative to marshal the assets of the estate, determine the valid debts of the estate, and settle the same prior to making any distribution to the beneficiaries of the estate. Generally, all creditors of the estate are entitled to be paid prior to any distributions being made to the beneficiaries of the estate. If the proper procedure is not followed, the Personal Representative could be held personally liable to the relevant creditors to the extent that there are insufficient assets in the estate to fully satisfy the relevant debts.

Attorneys familiar with administration of probate estates can also assist the Executor with obtaining a tax identification number for the estate (and any Trust identified in the relevant Will), determining what tax returns need to be filed (income tax returns, estate tax returns and/or gift tax returns), determining what social security benefits, if any, are available to the decedent's heirs, handling the roll-over of I.R.A. or 401(K) accounts without triggering unnecessary tax consequences, and providing advice with respect to various tax related issues, including the "stepped-up" tax basis that probate assets are afforded under the Internal Revenue Code.

Other statutes can affect the outcome of probate. The Georgia Legislature has adopted a Statute that provides the surviving spouse and any minor children of a deceased person with an elective share of that person's estate. The Statute, which is commonly referred to as "Year's Support", allows the surviving spouse to claim certain assets to the exclusion of other heirs-at-law of the decedent, as well as the decedent's creditors. The Year's Support Statute is often utilized by probate attorneys to claim significant assets of a decedent's estate that would otherwise pass to individuals other than the surviving spouse. For example, it often allows the spouse to safeguard the entire interest of the marital residence in a situation where an undivided interest in the same would otherwise pass to children from another marriage. The Year's Support Statute is sometimes employed by a surviving spouse to assert her priority over the claims of creditors of the Estate that would otherwise attach to the decedent's assets. The Statute can be asserted regardless of whether the decedent left a Will. In situations where the implementation of the terms of the Will or the Intestacy Statute are unfavorable to the surviving spouse, the surviving spouse will do themselves a great service by seeking counsel from an attorney that is familiar with probate procedure.

At Coleman, Chambers, Rogers & Williams, LLP, we have attorneys who are experienced in drafting Wills and Trusts, in assisting individuals with filing Petitions in Probate Court, in assisting Personal Representatives with the administration of larger estates, with reviewing and advising individuals with significant assets as to the tax consequences surrounding their estate and implementing measures to legally reduce the estate tax and with handling disputes in the Probate Court when beneficiaries and heirs-at-law disagree regarding the validity of a Will or the interpretation of a provision or term contained therein. We welcome you to schedule an appointment with one of our attorneys to discuss any of your probate or estate planning needs.

Please be advised that the purpose of this writing is not to provide legal advice, but is instead intended to provide a generic overview of certain issues that arise with some frequency in the areas of estate planning and probate. Please do not apply any of the information contained in this brief overview to your particular factual situation without seeking the consultation of an attorney who can review your specific situation and provide accurate and knowledgeable advice related to the same. For those interested in speaking with an attorney, Coleman, Chambers, Rogers & Williams, LLP offers free initial consultations.

About the author: Cale Rogers is a partner and attorney with Coleman, Chambers, Rogers & Williams, LLP, in Gainesville, Georgia. The law firm of Coleman, Chambers, Rogers & Williams, LLP regularly handles matters regarding probate, trusts, wills and estates law. The firm has handled or can handle probate and estate planning matters in numerous counties including: Hall County (Gainesville), White County (Cleveland), Lumpkin County (Dahlonega), Gwinnett County (Lawrenceville), Dawson County (Dawsonville), Habersham County (Demorest, Cornelia), all of Northeast Georgia, and throughout the State of Georgia.

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