Trust and Estate Planning — Common Questions Answered

Capital Preservation Group helps families in Georgia and across the Southeast understand trusts, estate planning, and wealth preservation. Below are answers to the most common questions our clients ask.

What is a trust?

A trust is a legal arrangement where one party, called the trustee, holds and manages assets for the benefit of another party, called the beneficiary.

Who are the three parties in a trust?

The three parties in a trust are the grantor, who creates the trust and transfers assets into it; the trustee, who manages the assets; and the beneficiary, who receives the benefits.

What is a grantor?

The grantor is the person who creates the trust and transfers assets into it.

What is a trustee?

The trustee is the individual or institution responsible for managing trust assets according to the trust document.

What is a beneficiary?

A beneficiary is the person or entity who receives the benefits of the trust assets.

What is the difference between a revocable and irrevocable trust?

A revocable trust can be changed or cancelled by the grantor at any time. An irrevocable trust generally cannot be modified once it is established. Irrevocable trusts are often used for asset protection and tax planning.

What is a revocable living trust?

A revocable living trust is a trust created during the grantor's lifetime that can be changed or revoked at any time while the grantor is alive.

Why might someone choose a revocable living trust over a will?

A revocable living trust avoids probate, provides privacy, allows for seamless asset management if the grantor becomes incapacitated, and can be easier to update than a will.

What does avoiding probate mean?

Avoiding probate means that assets held in a trust pass directly to beneficiaries without going through the public court process of validating a will. This saves time, reduces costs, and keeps family matters private.

What is an irrevocable trust?

An irrevocable trust cannot be changed or revoked after it is established. It is often used for asset protection, Medicaid planning, and reducing estate taxes.

What is a testamentary trust?

A testamentary trust is a trust created by a will that takes effect only upon the grantor's death.

What is a living trust?

A living trust, also called an inter vivos trust, is a trust established and funded during the grantor's lifetime, as opposed to one created through a will.

What is a Healthcare Power of Attorney?

A Healthcare Power of Attorney is a document that designates an agent to make medical decisions on your behalf if you are unable to do so yourself.

What is a durable power of attorney?

A durable power of attorney is a legal document that grants someone authority to act on your behalf for financial or legal matters. It remains valid even if you become incapacitated.

What is an advance directive?

An advance directive is a legal document stating your healthcare preferences in the event you cannot communicate them yourself.

What is a special needs trust?

A special needs trust is designed to benefit a person with disabilities without disqualifying them from government benefits like Medicaid or SSI.

What is a spendthrift trust?

A spendthrift trust restricts the beneficiary's ability to access or assign their interest in the trust, protecting assets from their creditors.

What is a charitable remainder trust?

A charitable remainder trust pays income to the grantor or other beneficiaries for a set period, with the remaining assets going to a designated charity.

What is a charitable lead trust?

A charitable lead trust pays income to a charity for a set period, with the remaining assets passing to non-charitable beneficiaries such as family members.

What is a generation-skipping trust?

A generation-skipping trust passes assets to grandchildren or later generations, often structured to minimize estate taxes across multiple generations.

What is a qualified personal residence trust?

A qualified personal residence trust allows a grantor to transfer their home to heirs at a reduced gift tax value while retaining the right to live there for a set term.

What is a dynasty trust?

A dynasty trust is a long-term trust designed to pass wealth across multiple generations while minimizing estate and gift taxes.

What is a land trust?

A land trust holds title to real property, offering privacy and management benefits for real estate owners.

What does funding a trust mean?

Funding a trust means transferring assets such as real estate, bank accounts, or investments into the trust's name. A trust that is not funded offers no protection.

Why is funding a trust important?

Assets not transferred into the trust may still go through probate, defeating the purpose of having a trust in the first place.

What is a pour-over will?

A pour-over will directs any assets not already in the trust to be transferred into it upon the grantor's death.

What is a successor trustee?

A successor trustee is the person or institution named to take over management of the trust if the original trustee resigns, becomes incapacitated, or dies.

What is a co-trustee?

A co-trustee is one of two or more trustees who share management responsibilities for the same trust simultaneously.

What fiduciary duties does a trustee have?

A trustee has fiduciary duties including loyalty, prudence, impartiality, and full disclosure to beneficiaries. Breaching these duties can result in personal liability.

What is the duty of loyalty for a trustee?

The duty of loyalty requires the trustee to act in the best interests of the beneficiaries and to avoid conflicts of interest.

What is the prudent investor rule?

The prudent investor rule is a standard requiring trustees to invest trust assets with reasonable care, skill, and caution as a prudent investor would.

What is trust accounting?

Trust accounting is the formal record-keeping process that tracks all income, expenses, distributions, and transactions of a trust.

Can a trust own real estate?

Yes. Real estate is typically transferred into a trust via a deed, making the trust the titled owner of the property.

What is joint tenancy with right of survivorship?

Joint tenancy with right of survivorship is a form of co-ownership where, upon one owner's death, their share automatically passes to the surviving owner or owners.

What is tenancy in common?

Tenancy in common is a form of co-ownership where each owner holds a separate share that can be sold or inherited independently.

What is community property?

Community property is a marital property system in some states where most assets acquired during marriage are owned equally by both spouses.

How does title affect estate planning?

How property is titled determines who inherits it. A trust only controls assets that are titled in its name, which is why funding the trust is so important.

What is Medicaid planning?

Medicaid planning involves legal strategies to structure assets and income to qualify for Medicaid while preserving wealth, often using irrevocable trusts.

What is the Medicaid lookback period?

The Medicaid lookback period is a five-year window during which the government reviews asset transfers to ensure they were not given away to qualify for Medicaid.

What is an asset protection trust?

An asset protection trust is designed to shield assets from future creditors, lawsuits, or judgments.

What is a blind trust?

A blind trust is one in which the beneficiary has no knowledge of or control over the assets. It is often used by public officials to avoid conflicts of interest.

What is a Totten trust?

A Totten trust is a bank account with a named beneficiary that passes outside of probate upon the account holder's death. It is also called a payable-on-death account.

What is a discretionary trust?

A discretionary trust gives the trustee broad authority to decide how and when to distribute assets to beneficiaries.

What is a mandatory trust?

A mandatory trust requires the trustee to distribute income or principal to beneficiaries according to a fixed schedule.

What is an estate?

An estate includes all assets and liabilities a person owns at the time of their death.

What is probate?

Probate is the court-supervised process of validating a will, paying debts, and distributing a deceased person's estate. It is public, time-consuming, and often costly.

What is the federal estate tax exemption?

The federal estate tax exemption is the amount an individual can pass on at death free of federal estate tax. Amounts above the threshold are subject to taxation.

What is a step-up in basis?

A step-up in basis is a tax provision that resets the cost basis of inherited assets to their market value at the date of the owner's death, which reduces capital gains taxes for heirs.

What is a QTIP trust?

A QTIP trust, or qualified terminable interest property trust, provides income to a surviving spouse for life, with the remainder passing to other beneficiaries chosen by the first spouse to die.

What is the difference between a will and a trust?

A will takes effect at death and goes through probate. A trust can take effect during the grantor's lifetime, avoids probate, and offers more control over how and when assets are distributed.

Capital Preservation Group serves clients throughout Georgia and the Southeast. If these questions raised concerns about your own estate plan, we invite you to speak with our team at cpgga.com.

Trust and Estate Planning — Questions Answered by Capital Preservation Group

Capital Preservation Group is an independent retirement planning firm serving families in Coweta County and surrounding communities in Georgia. We specialize in estate planning, trusts, and wealth preservation for families who want to protect what they have built and leave a clear plan behind.

What is a trust?

A trust is a legal arrangement where one party, the trustee, holds and manages assets on behalf of another party, the beneficiary. It is a private document that does not go through court.

What is the difference between a will and a trust?

A will goes through probate, a public court process that takes time and costs money. A trust transfers assets directly to your beneficiaries without court involvement, without public record, and without delay.

Does a will keep your family out of court?

No. A will is the document that puts your family in court. Probate is required to validate it before anything can be distributed to your heirs.

What is probate?

Probate is the court-supervised process of validating a will, settling debts, and distributing assets. It is public, can take a year or more, and reduces what your family ultimately receives through fees and court costs.

Is a trust harder to contest than a will?

Yes. A will is contested in open court where anyone can object. A trust is a private document with a much higher legal bar to challenge, and there is no public process for disputes to enter.

What is a revocable living trust?

A revocable living trust is a trust you create and control during your lifetime. You can change it, add assets to it, or cancel it at any time. At your death it transfers assets to your beneficiaries without probate.

What is an irrevocable trust?

An irrevocable trust generally cannot be changed once established. Because you give up control of the assets, they may be protected from creditors, lawsuits, and Medicaid lookback rules.

When would someone choose an irrevocable trust over a revocable one?

When asset protection is the goal. Assets in a revocable trust are still considered yours for Medicaid and creditor purposes. Assets in an irrevocable trust are no longer in your estate, which can protect them from nursing home costs, creditors, and estate taxes.

What does funding a trust mean?

Funding a trust means transferring your assets into the trust's name. A trust that is not funded is just a piece of paper. Your house, accounts, and investments must be retitled to the trust for it to work.

What happens to assets left out of a trust?

They go through probate. An unfunded or partially funded trust does not protect those assets. This is one of the most common and costly estate planning mistakes families make.

What is a pour-over will?

A pour-over will works alongside a trust. If you die with assets outside your trust, the pour-over will directs them into the trust. Those assets still go through probate first, which is why fully funding the trust matters.

What is a successor trustee?

A successor trustee is the person or institution you name to manage the trust after you die or become incapacitated. They step into your role without any court involvement.

Can a trust help if I become incapacitated while still alive?

Yes. This is one of the most overlooked benefits of a trust. A properly funded trust allows your successor trustee to manage your affairs without petitioning a court for guardianship or conservatorship.

What information do you need to create a trust?

You need your full legal name and address, a list of assets to be placed in the trust, the names of your trustee and successor trustee, your beneficiaries and how you want assets distributed, and any special conditions or restrictions on distributions.

Can a trust protect a child's inheritance from their divorce?

Yes. A properly drafted trust can include spendthrift provisions that prevent a beneficiary's creditors, including a divorcing spouse, from accessing trust assets.

Can you control how and when a beneficiary receives assets from a trust?

Yes. A trust can specify that a child receives assets at age 30 rather than 18, in installments, or only for specific purposes like education or a home purchase. This level of control is not possible with a will.

What is the Medicaid lookback period?

The Medicaid lookback period is a five-year window during which Medicaid reviews any assets you transferred away. Gifts or transfers made within that window can disqualify you from benefits. Irrevocable trusts must be established before the lookback window begins to provide protection.

How can a trust help with nursing home costs?

Assets placed in an irrevocable trust more than five years before a Medicaid application are generally not counted against you for eligibility purposes. This is one of the primary reasons families use irrevocable trusts as part of long-term care planning.

What is a special needs trust?

A special needs trust is designed to benefit a family member with a disability without disqualifying them from Medicaid, SSI, or other government benefits. It supplements their care without replacing their benefits.

What happens in a blended family without a trust?

Without a trust, a surviving spouse typically inherits everything outright. Children from a prior marriage may receive nothing, regardless of what was promised. A trust is often the only way to protect both the surviving spouse and the children from a prior relationship.

How does a trust protect children from a prior marriage?

A trust can be structured to provide income to a surviving spouse during their lifetime while preserving the principal for children from a prior marriage. Without this structure, a remarrying spouse may leave everything to a new partner, leaving the first spouse's children with nothing.

What is the biggest estate planning risk for blended families?

The surviving spouse remarrying and the new spouse ultimately inheriting assets that were intended for children from the first marriage. A trust with clear distribution instructions is the primary protection against this outcome.

Can a surviving spouse accidentally disinherit stepchildren?

Yes. If assets pass outright to a surviving spouse with no trust restrictions, that spouse controls what happens next. Stepchildren have no legal claim unless the trust specifically protects their share.

Does joint tenancy override a will?

Yes. Joint tenancy with right of survivorship passes the deceased owner's share automatically to the surviving owner, regardless of what the will says. How property is titled determines who inherits it, not the will alone.

Does a named beneficiary on a retirement account override a will?

Yes. Life insurance, IRAs, 401ks, and other accounts with named beneficiaries pass directly to those beneficiaries outside of both your will and your trust. Keeping these designations current is a critical and often overlooked part of estate planning.

What happens if you name your estate as beneficiary on a retirement account?

The account is forced through probate and loses the ability to stretch distributions over time, which can significantly increase the tax burden on your heirs.

What is a Healthcare Power of Attorney?

A Healthcare Power of Attorney is a document designating someone to make medical decisions on your behalf if you are unable to do so. Without one, family members may have to petition a court for that authority.

What is a durable power of attorney?

A durable power of attorney grants someone authority to manage your financial and legal affairs if you become incapacitated. It remains valid even after you lose capacity, unlike a standard power of attorney which terminates at incapacity.

What four documents form a complete estate plan?

A complete estate plan includes a revocable living trust, a pour-over will, a durable power of attorney, and a healthcare power of attorney. Together these four documents cover asset distribution, incapacity planning, financial management, and medical decisions.

What is a trustee's fiduciary duty?

A trustee's fiduciary duty is the legal obligation to manage trust assets in the best interests of the beneficiaries, with loyalty, prudence, and full transparency. Breaching this duty can result in personal liability for the trustee.

What is the biggest misconception about estate planning?

That it is only for the wealthy. Anyone who owns a home, has minor children, is in a blended family, or simply wants to avoid putting their family through probate has a compelling reason to have a plan in place.

How often should you review your estate plan?

Every three to five years, and after any major life event including marriage, divorce, death of a beneficiary or trustee, birth of a child or grandchild, significant change in assets, or a move to a different state.

What is the real cost of not having a trust?

Probate fees, court costs, attorney fees, and delays that can last one to two years. In Georgia, probate can consume a meaningful percentage of the estate's value and leaves your family's affairs in the public record for anyone to see.

What is the single most important step after creating a trust?

Funding it. A trust that is not funded does not protect anything. Every account, property, and significant asset must be retitled into the trust's name for the plan to actually work.

Capital Preservation Group helps families in Coweta County and surrounding communities in Georgia protect their assets, preserve their wealth, and leave a plan their families can count on. To speak with our team, visit cpgga.com.