SAVANNAH, Ga. (WSAV) — Bereavement is the grief and mourning experience than many go through following the death of a loved one.

Unfortunately for some, it’s joined with the stress of trying to figure out what the deceased persons wishes were.

According to a recent study, more than 50% of Americans think that estate planning is at least somewhat important, but only 33% have a will or living trust.

“You want to have a will certainly by the time you have a family.  If you’re married, at that point in time, you probably should have a will, and certainly if you have children. If you’re single you can do a very simple will.” said financial advisor CPA Steven Arkin of Arkin Financial Advisors, LLC.

He continued, “If you’ve got any kind of complications, be it custody, who’s going to take care of your children, who’s going to take care of your assets, any kind of complications, you’re going to want to go to an attorney to help draft an appropriate will.”

Savannah attorney Russ Simpson, who has over 30 years of legal services including trust and estate matters, participated in a Q&A with WSAV on the matter.

What is the difference between a will and living trust?

Well, first, let me say that my comments in this article are general in nature and should not, may not and cannot be relied upon by anyone as legal advice.  Every situation is different and requires customized analysis and advice.  Now, on to the questions.

A Will is a written document executed with various formalities required by law that transfers the real property (land and buildings) and/or personal property owned by the maker of the Will (called a Testator).  It becomes effective to transfer the property only after the Testator’s death and after a court determination that the Will is in fact the “last” Will of the Testator, was executed with strict adherence to all the formalities required by law and was not the product of fraud, duress, mistake or undue influence.

That process of legal determination is referred to as “probate,” and the court that has exclusive jurisdiction over the process is referred to as the “Probate Court.”   Every county in Georgia has one.  The law requires that a Will be probated in the Probate Court of the county that was the Testator’s “domicile” (home) at the time of death.

A trust is a form of ownership of real property and/or personal property by one person, the “Trustee,” for the benefit of one or more persons (the “Beneficiaries”), either at the same time or in some specified order. 

If the trust is created by a Will, it is referred to as a “testamentary trust” and does not become effective to do anything until the Will has been probated.  If the trust is created while the maker (technically referred to as a “Settlor,” but typically called a “Grantor,” or “Trustor”) is alive, then it is what lawyers refer to as an “inter vivos trust,” but is commonly referred to as a “Living Trust” or “Revocable Trust” if the Grantor reserves the right to change it at any time.  

In Georgia, the same person may be the Grantor, the sole Trustee and the sole Beneficiary.  Living Trusts are basically contractual agreements about how property is to be held, managed and distributed both during the Grantor’s life and after the Grantor’s death. 

Since a Living Trust after the Grantor’s death operates the same as a testamentary trust (without having to go through probate), the principal practical difference between a Will and a Living Trust is that the Living Trust can have provisions about how the trust property is going to be managed for the benefit of the Grantor (and, if applicable, the Grantor’s spouse and children) if the Grantor becomes mentally incapacitated prior to death. 

A Will cannot address that need simply because a Will is never, ever effective to do anything until the Testator has died.  Typically, the Grantor of a Living Trust also will have a Will to deal with property that is not retitled into the Living Trust while the Grantor/Testator is alive.  That kind of Will usually is referred to as a “Pour-Over Will” because basically all it says is “transfer anything that passes subject to the control of this Will to the Trustee of my Living Trust.”   

It should be noted that a Will and/or Living Trust does not dispose of all types of property, for example, 401(k)s, IRAs, life insurance, annuities, financial accounts or real property held in joint names with right of survivorship and contractual benefits such as pensions.  All of those kinds of assets pass according to some kind of beneficiary designation, contractual right or statutory law.  Who should be the recipients of those kinds of assets, both for real world purposes and tax minimization purposes, should be discussed with a skilled financial advisor, CPA and/or tax attorney.  It can be very complicated.

Is one better than the other and if so, why?

I typically favor the Living Trust and Pour-Over Will because of the need to deal with the potential of mental incapacity of the maker before death.  The maker also should have a durable general power of attorney and an advance directive for health care to one or more persons to deal with certain matters that a Living Trust and/or Will cannot.

What is the earliest age that a person should get either one?

Anyone over the age of 18 should have a health care directive to allow someone to access their medical information and make their medical decisions if they are unable to do so themselves because of a sudden injury or medical event.  

Anyone over age 18 who has even limited amounts of property (including accounts) should have a durable general power of attorney for someone to deal with those things if the person becomes mentally unable to do so.  

However, the law does NOT require third parties such as banks, brokerage houses and real estate title companies to deal with the holder of a power of attorney, so that anyone over age 18 who owns real estate, significant investment accounts, businesses, etc. should have a Living Trust and transfer their assets into it, excluding certain things such as IRAs and annuities, because of tax considerations.  Not all lawyers will agree with me on this.  Many will say that in simple situations, a combination of a Will, durable general power of attorney and health care directive are sufficient. 

Interestingly, in Georgia, anyone over 14 years of age may create a valid Will, even though anyone under age 18 generally cannot create a legally binding contract, including a trust.  Of course, most people under the age of 18 do not have much property in their names, but sometimes they do, for example, as the result of personal injury lawsuits.

How can someone determine if they have enough assets to leave behind in a will or living trust? What is the risk in dying without a will or living trust?

If a citizen of Georgia dies without a Will or Living Trust, then the law stipulates who will receive whatever the decedent had.  That can lead to unexpected and/or unwanted results. 

Real estate and accounts held jointly with right of survivorship will pass to the named co-owners.  Accounts that have “pay on death” or “transfer on death” designations will pass to the designated person(s). 

Assets that have beneficiary designations will pass to the designated person(s).  Note that such assets often go awry when the owner dies because the intended recipient dies before the owner of the asset and no successor recipient is specified.  Also, some assets, e.g., 401(k) plan benefits must pass to the surviving spouse by federal law, even if that is not what the deceased spouse wanted (for instance, in a second marriage situation). 

Also, Georgia has a relatively new law that allows decedents to dispose of “tangible personal property, other than money” in a legally enforceable manner by a writing signed and dated by the decedent describing the property and the recipient in an understandable way.

If all of a decedent’s property is not disposed of by one of the foregoing methods and the decedent had no (valid) Will, the remaining property “passes by intestacy” per Georgia statutory law.  The Georgia Code in effect writes a Will for an intestate decedent, even if the decedent, if asked while living, would have liked to have had things done differently.  For instance, suppose one spouse dies “intestate” (i.e., without a valid last will and testament) survived by a second spouse and two children.  Regardless of age and whether they are children of the surviving spouse, the children of the deceased spouse receive two-thirds of the decedent’s “estate” (in general, all real and personal property not disposed of in one of the ways described in the preceding paragraph), and the surviving spouse receives one-third. 

When a parent dies young, this can wind up with the minor children owning two-thirds of the marital home, or when it is a second (or subsequent) marriage, it can result in children from a prior marriage (regardless of age) who don’t get along with the surviving spouse owning the majority of the marital home.  The problems that an intestacy can create are limited only by one’s imagination.  Anyone who has anything of value at the bare minimum should have a simple Will, a durable general power of attorney, a health care directive and a recently updated primary and secondary beneficiary designation for assets that pass in that manner.  

How does one get a valid will or living trust in Georgia?

Georgia law does not recognize holographic (handwritten) Wills if they are not executed with all the legally required formalities (which few non-lawyers know), and Georgia law does not recognize nuncupative (oral) Wills at all.  While it is possible to obtain “kit” Wills from various internet services, there is a very high likelihood the Will will wind up being invalid for any one or more of a number of reasons or, even if valid, will not work the way that was intended because of some legal principal or unexpected circumstance not considered by the maker. 

By far the best way to obtain a valid Will and/or Living Trust is to engage a Georgia attorney who devotes much of his or her time to estate and trust planning and administration to (1) help develop the estate plan (with input from the client and perhaps the client’s spouse, financial advisor and/or CPA) and then (2) write the Will and/or Living Trust (and durable general power of attorney and health care directive) in a clear, well thought out, valid way.  One way to find such an attorney is to go to the Savannah Bar’s website, and select “Trusts & Estates” from the Practice Areas drop down menu.  Persons with large estates and/or tax issues generally get from their CPA and financial advisors the names of several attorneys to interview who likely have the specialized skill sets required for their situations.