What happens to your home, savings, and family heirlooms if you pass this year, or even this week? Many people assume a will is enough, but their families get stuck in delays and red tape. Trusts offer more control and smoother transfers, especially for Georgia families who want to keep things private and organized.
At Horizon Law, we build plans that protect what you have built and reflect your goals across Georgia. Our team focuses on estate planning and probate, and we use tools that fit real life, not one-size-fits-all rules. This article breaks down common trust types, how they work, and where each one shines.
Understanding Trusts in Georgia Estate Planning
A trust is a legal arrangement where one person, called the grantor, transfers assets to a trustee to manage for the benefit of others. The grantor sets the terms, the trustee carries out those instructions under a fiduciary duty, and the beneficiaries receive income or property based on the rules of the trust. Trusts can manage assets during your lifetime and control how trust assets are handled upon your death.
In Georgia, trusts are a core estate planning tool used to organize property, protect assets, and address tax implications over time. The Georgia Trust Code, found at O.C.G.A. § 53-12-1 and following sections, governs how trusts are created, funded, and enforced. A well-structured trust also works alongside the probate process, helping families transfer assets more efficiently and with greater privacy when possible.
With that framework in mind, we can look at the types of trusts Georgia families use most often. We will start with living trusts that operate during life, then review trusts created through a will. We will also cover options designed for charitable giving and for protecting eligibility for government benefits.
The 5 Most Common Types of Trusts in Georgia
The trusts below are commonly used in Georgia estate planning because each one addresses a specific need. Some focus on maintaining control, others on transferring wealth, protecting assets, or managing taxes. We will walk through the benefits and limitations of each trust in clear, practical terms so you can see where they may fit in your estate planning process.
Revocable Living Trust
A revocable living trust is created during your lifetime and can be changed or revoked at any time as long as you have capacity. You can serve as your own trustee and maintain control over trust assets such as real estate, bank accounts, and personal property. If you become ill or unable to manage finances, a named successor trustee can step in and handle payments and daily financial needs without court involvement.
- Avoids the probate process for assets titled in the trust
- Allows you to maintain control and update the trust as life changes
- Provides continuity during incapacity without the need for a guardianship
The main limitation is that a revocable trust does not provide asset protection. Assets held in the trust remain reachable by creditors and are still included when calculating federal estate taxes and estate tax liability. Even so, many Georgia families use revocable living trusts to simplify the estate planning process, reduce delays, and keep details private, especially when probate would otherwise be required under O.C.G.A. § 53-5-1.
Next, we will look at a trust that becomes much harder to change after it is created. This shift in control is what opens the door to different tax benefits and protection strategies.
Irrevocable Trust
An irrevocable trust is typically permanent once it is signed and funded. After assets are transferred, the grantor gives up control, and changes are allowed only in limited situations. That loss of control is what makes this type of legal arrangement useful for asset protection and long-term tax planning, especially for larger or more complex estates.
- May help minimize estate taxes and reduce overall tax liability
- Can offer stronger asset protection from creditors and lawsuits
- Allows structured distributions of trust funds over a specified period
The tradeoff is flexibility. Once assets are moved into an irrevocable trust, the grantor cannot freely change terms or reclaim property. Depending on how the trust is written, there may be income tax or estate and gift tax consequences, including potential tax savings under federal estate tax rules. Because these trusts can affect remaining assets and future generations, careful drafting by an estate planning attorney is critical.
Not all trusts are created during life. Some take effect only after death through a will. That brings us to the next type of trust.
Testamentary Trust
A testamentary trust is created through your will and only takes effect upon your death. In Georgia, the will must first move through the probate process before the trust is funded and begins operating. This makes a testamentary trust different from a living trust, which can function during your lifetime.
Because the trust is written into the will, upfront costs during life are often lower. However, this approach does not avoid probate, and trust assets remain subject to court oversight during estate administration. Testamentary trusts are often used to manage inheritances for minor children or to control how remaining assets are distributed to family members over time.
Families with loved ones who rely on government assistance often need a more focused solution. That is where a special needs trust comes into play.
Special Needs Trust
A special needs trust is designed to support a person with a disability while preserving eligibility for government benefits such as Supplemental Security Income and Medicaid. Trust funds can be used for expenses that public programs do not cover, including therapies, education, transportation, and quality-of-life improvements.
Georgia follows federal guidelines under 42 U.S.C. § 1396p for first-party, third-party, and pooled special needs trusts, with oversight tied to eligibility for government benefits. Distributions must be handled carefully so the trust principal does not interfere with benefit rules. Trustees have a strict fiduciary duty, and many families include a letter of intent to guide future care decisions and priorities.
Some families also want their estate plan to reflect charitable values while still providing for heirs. A charitable trust can help balance both goals.
Charitable Trust
A charitable trust allows you to support a charitable organization while also gaining meaningful tax benefits. Two common forms are charitable lead trusts and charitable remainder trusts. A charitable lead trust pays income to a charity for a set term, with the remaining funds later passing to family members. A charitable remainder trust works in the opposite order, allowing you or another beneficiary to receive income first before the charitable remainder is distributed.
These trusts may provide income tax deductions, help minimize estate taxes, and reduce capital gains tax when funded with appreciated assets. For Georgia families focused on tax savings and long-term planning, charitable trusts can be an effective estate planning tool when structured and administered correctly.
Revocable vs. Irrevocable Trusts
Both tools transfer wealth under written rules, yet they handle control and taxes differently. Revocable trusts keep you in the driver’s seat, while irrevocable trusts trade control for protection. The right pick depends on goals, risk level, and tax exposure.
| Feature | Revocable Trust | Irrevocable Trust |
| Control during life | Grantor keeps control and can change terms | Control is given up, changes are limited |
| Probate avoidance | Yes, for assets titled to the trust | Yes, if assets are funded to the trust |
| Creditor exposure | Assets reachable by the grantor’s creditors | Often, stronger protection from the grantor’s creditors |
| Estate tax inclusion | Included in the grantor’s estate | Often excluded, based on terms |
| Typical uses | Privacy, smooth transfers, incapacity planning | Tax reduction, asset protection, long-term wealth transfer |
In Georgia, revocable trusts fit families focused on privacy and avoiding probate delays, especially where real estate spans multiple counties. Irrevocable trusts can help larger estates, business owners, and families with lawsuit risks. Many plans use both, each doing a different job.
Customized Trusts Used in Georgia Estate Plans
Some trusts solve focused problems that a general living trust does not handle well. These are common tools for tax planning, liquidity, and long-horizon gifts. Each one needs clean drafting and steady administration.
Irrevocable Life Insurance Trust (ILIT)
An ILIT owns life insurance on the grantor, so the death benefit sits outside the taxable estate. The trustee receives the proceeds, then follows the written instructions for paying bills or supporting heirs. This keeps a large policy from inflating estate tax exposure.
An ILIT can also create cash to pay estate taxes, debts, or buy-sell obligations without forcing a fire sale of real estate or a family business. Premium gifts often use annual exclusion gifts with notices to beneficiaries. Timing and recordkeeping matter here.
Homes carry high value and high emotion. A Qualified Personal Residence Trust can be a fit when passing a house to the next generation. Here is how it works.
Qualified Personal Residence Trust (QPRT)
A QPRT moves a primary home or vacation house into a trust at a reduced gift value, then shifts full ownership to beneficiaries after a set term. The grantor keeps the right to live there during the term, which lowers the taxable value of the transfer. If the grantor outlives the term, later appreciation can pass outside the estate.
QPRTs work best when home values are strong, and the grantor’s health supports a longer term. Insurance and maintenance should be addressed in writing. Families also plan for rent payments if the grantor stays after the term ends.
Asset protection trusts set off lots of debate. Georgia has its own stance on these structures. Here is the short version.
Domestic Asset Protection Trust (DAPT)
Georgia law does not allow Domestic Asset Protection Trusts. Residents sometimes use a DAPT in states that permit them, but enforcement in Georgia courts can be uncertain. Talk with counsel about risk, conflict of laws, and safer in-state methods for protection.
Some families think past the next generation. A trust can skip a rung on the family tree and reduce transfer taxes. That is where a GST comes in.
Generation-Skipping Trust (GST)
A GST sends wealth to grandchildren or later heirs, with rules that aim to avoid estate tax at your child’s level. The federal generation-skipping transfer tax applies, but there is a lifetime exemption that can shield large gifts. Correct allocation of that exemption is vital, and the trust language should match the tax filing.
Purpose and Benefits of Different Trusts
Trusts are tools that can hit different targets, from taxes to privacy to caring for a vulnerable loved one. The right mix can bring structure, predictability, and family harmony. Good planning also keeps court involvement to a minimum.
- Lower estate or gift taxes, preserving more for future heirs.
- Shield assets from creditors and lawsuits under the allowed rules.
- Avoid probate for titled assets and keep details private.
- Provide custom support for a child with a disability or a parent needing long-term care.
Each benefit comes with rules that need to be followed. Trustees should keep records, send notices, and follow distribution standards. A little discipline goes a long way.
Choosing the Right Trust Structure for Your Estate Plan
Your trust should fit your assets, your family, and the path you want those assets to take. Think about types of property, ages and needs of beneficiaries, tax exposure, and how much control you want to keep. The answers drive which trust sits at the center of your plan.
Some families lean on a revocable trust for privacy and day-to-day flexibility. Others add an irrevocable trust for taxes or protection, or use a special needs trust to keep benefits safe. Getting advice from a Georgia estate planning attorney can help you pick the mix that fits your goals.
Protect Your Legacy with Horizon Law
Horizon Law helps Georgia families build clear, practical estate plans and handle probate with care. If you have questions or want to review your options, feel free to call us at (678) 866-4058 or reach us through our Contact Us page. We welcome your questions and will work to shape a plan that fits your life and protects the people you love.
