Trusts are a powerful tool in estate planning. They help ensure that assets are protected, distributed smoothly, and, in many cases, avoid probate. At Peach State Wills & Trusts©, a division of The Beck Law Firm, LLC, we help Georgia residents create personalized estate plans that align with their goals. One of the most common questions we get is, "What assets should and shouldn't be included in a trust?"

The answer depends on several factors, including your financial situation, long-term objectives, and the type of trust you're using. Let's take a closer look at which assets belong in a trust and which ones don't.

What Assets Should Be in a Trust?

Including the right assets in a trust can provide significant benefits. Here's a breakdown of what typically should be included:

1. Real Estate

If you own a home, vacation property, or rental property, placing them in a trust can help avoid probate and make it easier for your heirs to manage. In Georgia, real estate held in a trust can also provide protection from creditors, depending on the type of trust you use. A properly structured trust can streamline the transfer process and prevent disputes over property ownership.

2. Financial Accounts

Many financial assets can be placed in a trust, making it easier to manage and distribute them. These include:

●  Checking and savings accounts – Helps avoid delays in accessing funds after passing.

●  Non-retirement brokerage and mutual fund accounts – Allows for seamless transfer of investments.

●  Certificates of deposit (CDs) – Can be included, but banks may require additional documentation.

●  Money market accounts – Provides quick liquidity within the trust.

●  Bonds and stock certificates – Protects these assets from probate.

3. Business Interests

If you own a business, placing it in a trust can ensure a smooth transition of ownership. This is especially useful for family-owned businesses and LLCs in Georgia. Holding business interests in a trust helps protect the company from probate delays and potential conflicts between heirs.

4. Valuable Personal Property

A trust can hold high-value assets such as:

●  Artwork

●  Collectibles

●  Antiques

●  Jewelry

If these items hold sentimental or financial value, putting them in a trust helps ensure they are distributed according to your wishes and protected from potential disputes.

5. Life Insurance Policies

A trust can be designated as the owner or beneficiary of a life insurance policy. This allows you to control how the policy proceeds are distributed. For example, if you have minor children, a trust can help manage the funds for their benefit rather than distributing a lump sum outright.

What Assets Shouldn't Be in a Trust?

While trusts are useful, not everything should be placed in one. Here are some assets that typically don't belong in a trust:

1. Retirement Accounts (Generally)

401(k)s, IRAs and other retirement accounts should not be transferred directly into a trust during your lifetime. Doing so can trigger tax consequences. Instead, you can name the trust as the beneficiary to control how funds are distributed after your passing.

2. Health Savings Accounts (HSAs) and Medical Savings Accounts (MSAs)

These accounts have tax advantages that could be lost if transferred to a trust. Instead, you can name a beneficiary to receive the funds upon your passing.

3. Motor Vehicles (Generally)

Most everyday vehicles don't need to be placed in a trust due to potential complications with insurance and registration. However, collectible or classic cars with significant value might be an exception.

4. Foreign Assets (Generally)

If you own property or investments outside the U.S., placing them in a domestic trust can be complicated. Depending on the country's regulations, foreign trusts may be a better option.

Special Considerations for Georgia Residents

Estate laws vary by state, and Georgia has specific provisions that impact how trusts operate. Here are some key factors to keep in mind:

1. Creditor Protection

Georgia law provides strong creditor protection for assets held in an irrevocable trust. This means that once assets are placed in such a trust, they are typically protected from lawsuits and creditor claims against the grantor.  The downside is that the grantor (the person making the trust) has to trade off ownership and control, and benefits from, the assets placed in the irrevocable trust to truly have those assets protected.

2. Spendthrift Provisions

Georgia recognizes spendthrift provisions in trusts, which can prevent beneficiaries' creditors from claiming trust assets. This is particularly useful for protecting an inheritance from irresponsible spending or legal judgments.

3. Medicaid Asset Protection Trusts (MAPTs)

For those concerned about long-term care costs, a Medicaid Asset Protection Trust can help preserve assets while planning for Medicaid eligibility. Georgia enforces a five-year lookback period, meaning assets must be transferred well before needing Medicaid benefits.

Is Your Estate Plan Ready for the Future? Contact Peach State Wills & Trusts© Today!

A well-structured trust can provide security, avoid probate, and give you peace of mind. If you're unsure about what should and shouldn't be in your trust, we're here to help.

Contact Peach State Wills & Trusts© for a consultation today. Call 678-344-5342 or visit our Contact Us page to get started. You can also download our free estate planning guide HERE, no strings attached. Let's work together to secure your legacy and protect what matters most.