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Estate Planning Basics for Financial Professionals

Posted by Joel Beck | Feb 01, 2022 | 0 Comments

As a financial advisor, you work with your clients to ensure their assets are managed well to support them in the long run. This often includes estate planning considerations. After all, many clients don't want to wisely manage their wealth to only benefit themselves, but to also benefit their children and loved ones after they are gone. We regularly receive client referrals from financial advisors, and as we both work to protect our mutual clients' best interests, we want to make sure you are informed on the basics and best practices of estate planning in Georgia.

First, what estate planning documents are needed in Georgia? The three essential planning documents in our state are a Will, a Durable Power of Attorney, and an Advanced Directive for Healthcare. Most people are familiar with the Will, which is the document that distributes one's assets after their death. The Durable Power of Attorney designates an agent to act on behalf of the principle in managing their finances and banking activities. Keep in mind that this permission can be granted only in the event the principle cannot make such decisions, or for all times at his discretion. Finally, the Advanced Directive for Healthcare authorizes an agent to make medical decisions on behalf of the principle in the event he or she is unable to do so themself.

Second, what about trusts? Of all elements of estate planning, the most confusion revolves around trusts. Understand that there are multiple types of trusts. A testamentary trust, which is included in one's Will, is a trust that is part of a Will, and comes into being only after a person dies.  This trust can be used to hold and distribute assets for a beneficiary under the management of a trustee. These trusts are particularly helpful for parents of minors, or when there are other reasons that a beneficiary may not be able to wisely manage their inheritance on their own.

On the other hand, a Revocable Living Trust is a trust set up while a person is alive, and has assets that are transferred to it during the trust maker's lifetime.  The RLT can also be revoked at any time. In a nutshell, this type of trust works by moving assets, such as a house, bank and non-retirement investment accounts, cars, and tangible personal property into the name of the trust, a process called ‘funding the trust.' After the trustee dies, his or her assets are distributed through the trust, under management of a successor trustee, thereby avoiding the probate system. In some states, RLTs are common and necessary simply to avoid an inefficient, costly and problematic probate system. In Georgia, however, through the use of a well written Will and proper beneficiary designations, probate is fairly efficient and thus RLTs are not necessary for most people. However, RLTs can be beneficial in certain circumstances, such as when a person…

  • Owns property outside the state of Georgia.
  • Is planning for an anticipated incapacity or disability.
  • Desires a certain level of privacy by keeping one's estate distribution out of public records.
  • Has a blended family and wants to ensure assets are given to intended recipients.
  • Wants to protect their child's inheritance from creditors or a spouse.

Note that last reason for an RLT—'protect their child's inheritance from creditors'. This is an oft misunderstood element of RLTs. A Revocable Living Trust does NOT protect the trust grantor's assets from his or her creditors. Only the beneficiaries of an RLT might receive any level of asset protection, and only for so long as the assets remain in the trust. Potential clients often tell us they want a trust to protect their assets from creditors, but this is not something that can be done through typical estate planning. Asset protection is a much more complicated process. 

Furthermore, adult children caring for elderly parents often want a trust to protect their parents' assets when planning for Medicaid and nursing home care. Again, this is not something that can be done through an RLT alone, and will need to be handled by an elder law attorney that specializes in this type of planning.

Finally, when should you encourage clients to contact Peach State Wills and Trusts about their estate plan? The most obvious answer is when a client has no plan in place. No matter one's age or stage of life, all adults should have the three basic planning documents, at a minimum. Life is unpredictable; being prepared for the unexpected could save your clients and their loved ones time, frustration, and expense should they become incapacitated or pass away. If your client tells you that they have their documents in place, we recommend asking them when their documents were created. While estate planning documents will generally never expire, a plan made 10 or 20 years ago may no longer be ideal and likely don't reflect changes made in the laws from time to time. We recommend people review their estate plan on their own once a year, and with an experienced estate planning attorney every three years to ensure their plan still reflects their wishes.

Furthermore, keep an eye out for Powers of Attorney signed prior to July 1, 2017. In July of 2017, Georgia enacted the Uniform Power of Attorney Act, which expanded protections for both the principal and the agent of a POA. For example, the new law enables an agent to coerce a bank or financial institution to accept the POA and allow them to act on behalf of the account holder. It also better holds rogue agents who abuse their power accountable for misuse of assets. Note that these new benefits only apply to POAs dates on or after July 1, 2017 and on forms that substantially comply with the new law; if your client has a POA from before this time, encourage them to contact Peach State Wills and Trusts to update their document and take advantage of the new law.

We hope this rundown of estate planning in Georgia will prove helpful to you in 2022. If you or your clients have any questions about estate planning, what documents they need, or how best to protect themselves and their loved one's should the unexpected happen, give Peach State Wills and Trusts a call at (678) 344-5342.

About the Author

Joel Beck

Joel Beck founded The Beck Law Firm, LLC in 2007. His firm focused on business law and estate planning needs of clients, two areas that he was drawn to based upon personal and business experiences in his life, including a ten-year career at NASD (now known as FINRA).


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