Trust Planning After Inheriting Money

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Inheriting money is a big moment. It can bring relief, opportunity, and, honestly, a lot of questions. What do you do with it? How do you protect it? How do you make sure it lasts for your family? If you’ve recently inherited money in Atlanta, Georgia, trust planning is one of the smartest steps you can take. At Slowik Estate Planning, located in Atlanta, Georgia, we work with clients every day who want to make the most of what they’ve received. This page walks you through what trust planning after an inheritance really looks like, what Georgia law says, and why acting now matters.

Table of Contents

Why Trust Planning Matters After You Inherit Money

Most people who inherit money think about two things first: paying off debt and investing. Both make sense. But there’s a third step that many people skip, and it’s the one that can make the biggest difference over time: putting a plan in place to protect and pass on what you’ve received.

Without a plan, inherited money can disappear quickly. Creditors, lawsuits, taxes, and even poor spending habits can erode a windfall in just a few years. A trust gives you a legal structure to hold and manage those assets according to your wishes. It keeps things organized, private, and protected.

Georgia law governs trusts under the Revised Georgia Trust Code, found in O.C.G.A. Title 53, Chapter 12. Under O.C.G.A. § 53-12-23, a trust may be created for any lawful purpose. That’s a wide door. You can use a trust to hold inherited cash, real estate, investment accounts, business interests, and more. The key is making sure the trust is set up correctly from the start.

Think about it this way. If you inherited $500,000 today and put it in a savings account, it’s accessible to creditors if you’re ever sued. It’s also part of your taxable estate when you pass away. But if you place those funds into the right type of trust, you gain protection, control, and the ability to pass wealth to your children or grandchildren with far fewer headaches.

You also need to think about your own wills and how they interact with any trust you create. A trust without a coordinated will, or vice versa, can leave gaps in your plan. The team at Slowik Estate Planning can help you see the full picture and make sure everything works together.

Don’t wait until a financial crisis forces your hand. The best time to plan is right after you inherit, when you have the most options available to you.

Understanding the Step-Up in Basis and What It Means for Your Inherited Assets

One of the most valuable tax benefits that comes with an inheritance is something called the “step-up in basis.” This rule can save you a significant amount of money on capital gains taxes. Understanding it helps you make smarter decisions about what to do with inherited assets, especially before you put them into a trust.

Under federal law, the gross estate of the decedent consists of an accounting of everything the decedent owned or had certain interests in at the date of death, and the fair market value of these items is used, not necessarily what was paid for them or what their values were when acquired. This is the foundation of the step-up in basis rule under Internal Revenue Code § 1014.

Here’s a simple example. Say your parent bought stock for $50,000 thirty years ago. By the time they passed away, it was worth $300,000. If you inherited that stock, your tax basis is stepped up to $300,000, the value at the date of death. If you sell it right away for $300,000, you owe zero capital gains tax on that $250,000 in growth.

But this rule has limits. According to IRS Revenue Ruling 2023-2, assets held inside an irrevocable grantor trust that are not included in the decedent’s gross estate do not receive a step-up in basis at death. In other words, if the person who set up the trust did not retain enough control over the assets to pull them back into their taxable estate, those assets keep their original (often much lower) cost basis. That means if you later sell those assets, you could owe capital gains taxes on a much larger gain.

This is a critical planning point. Before you transfer inherited assets into a trust, you need to understand the tax consequences. Rushing into a trust structure without considering the basis rules can cost you thousands of dollars in avoidable taxes. Slowik Estate Planning reviews these issues carefully with every client, so you don’t get surprised down the road.

Types of Trusts to Consider After Inheriting Money in Georgia

Georgia recognizes many types of trusts, and each one serves a different purpose. Choosing the right one depends on your goals, your family situation, and the nature of the assets you’ve inherited. Here’s a look at the most common options.

A revocable living trust is a popular starting point. You keep control of the assets during your lifetime, and the trust avoids probate when you pass away. A revocable living trust doesn’t allow you to circumvent estate taxes. However, Georgia doesn’t have its own estate tax, which means that a Georgia living trust is only subject to federal estate tax. This makes Georgia a favorable state for trust planning.

An irrevocable trust offers stronger protection. Once you transfer assets into it, you generally give up direct control, but you gain significant benefits. An irrevocable trust provides asset protection, safeguarding the trust’s property from creditors and potential legal claims against the settlor. Since the assets are no longer owned by the settlor, they typically do not count towards the settlor’s taxable estate, which can help mitigate estate taxes.

A spendthrift trust is ideal if you want to leave money to a beneficiary who may not manage finances well. Under Georgia law, spendthrift trusts are an option that can limit a creditor’s ability to take a beneficiary’s interest before they receive it. While these are generally effective, Georgia law lists several exceptions where these protections do not apply, such as for child support, taxes, or judgments resulting from a crime.

A discretionary trust gives the trustee full power to decide when and how much to distribute to beneficiaries. Discretionary trusts offer a different type of protection. In these arrangements, the trustee has the sole power to decide when and if a beneficiary receives money. Because the beneficiary cannot force a payment, a creditor generally cannot force the trustee to pay out funds to satisfy a debt.

You might also want to consider trusts for specific purposes, like a special needs trust for a family member with a disability, or even pet guardianships if you want to make sure your animals are cared for. The right trust type depends entirely on your situation, and that’s exactly what Slowik Estate Planning helps you figure out.

Federal Estate and Gift Tax Rules That Apply to Your Inherited Wealth

Even if you’ve inherited a large sum of money, you may not owe federal estate tax right now. But that doesn’t mean taxes aren’t a concern. Understanding the current rules helps you plan ahead and keep more of what you’ve received.

The federal estate tax exemption increased to $15 million per individual in 2026 ($30 million for married couples) for people who die on or after January 1, 2026. This is up from $13.99 million for individuals dying in 2025. Estates whose taxable value falls below that threshold generally will not owe federal estate tax. The One, Big, Beautiful Bill was signed into law on July 4, 2025, as Public Law 119-21, and amends § 2010(c)(3) by increasing the basic exclusion amount to $15,000,000 for gifts for calendar year 2026.

Under the One Big Beautiful Bill Act, this new $15 million gift, estate, and generation-skipping exemption amount is now “permanent” but will continue to be indexed annually to inflation. That’s good news for most families in Atlanta. But don’t let the high exemption make you complacent.

The highest federal estate tax, gift tax, and GST tax rate remains at 40% for 2026. If your total estate, including the money you’ve inherited, grows beyond the exemption threshold, that 40% rate kicks in on the excess. For many people, especially those who inherit real estate, business interests, or investment portfolios on top of their existing assets, this is a real concern.

Each year, the IRS sets the annual gift tax exclusion, which allows a taxpayer to give a certain amount (in 2026, this remains at $19,000) per recipient tax-free without using up any of the taxpayer’s lifetime gift and estate tax exemption ($15 million in 2026). Using annual gifts strategically, alongside a trust, can help you move wealth to the next generation without tax consequences.

If you have family members outside the United States, the rules get more complex. International Estate Planning is a separate area of consideration that Slowik Estate Planning can address for clients with cross-border family situations.

Your Role as a Trust Beneficiary After Inheriting Through a Trust

Sometimes, the inheritance you receive doesn’t come as a direct check. It comes through a trust that someone else set up. Maybe a parent or grandparent had a revocable living trust, and now that they’ve passed, you’re a named beneficiary. Understanding your rights and responsibilities in that situation is just as important as knowing how to set up your own trust.

Under Georgia law, trustees have specific duties to trust beneficiaries. They must act in your best interest, keep you informed, and manage the trust assets prudently. The Revised Georgia Trust Code under O.C.G.A. Title 53, Chapter 12 sets out detailed rules governing trustee conduct, including investment standards, accounting requirements, and conflict-of-interest rules.

If you’re a beneficiary and you feel the trustee is not doing their job, Georgia law gives you options. In Georgia, jurisdiction over most trust matters is in the superior court. You can petition the court for an accounting, removal of the trustee, or other relief if the trustee has breached their duties.

You may also need to think about what happens to the assets you receive from the trust. Once those funds are distributed to you, they’re in your name and subject to your creditors. That’s why many beneficiaries choose to immediately fund their own trust with the inherited assets, creating a layer of protection for themselves and their own heirs.

Proper trust administration is not just the trustee’s job. As a beneficiary, staying engaged and informed protects your interests. Slowik Estate Planning works with beneficiaries throughout the trust administration process, helping them understand their rights and plan for the future with the assets they receive.

Estate planning is not solely about minimizing taxes. It also involves ensuring your assets are distributed according to your wishes, designating guardians for minor children, and establishing trusts for beneficiaries with special needs. Whether you’re setting up a new trust or navigating one that already exists, having the right legal guidance makes a real difference. Contact Slowik Estate Planning in Atlanta, Georgia to schedule a conversation about your situation.

FAQs About Trust Planning After Inheriting Money in Atlanta, Georgia

Does Georgia have an inheritance tax or estate tax?

No. Georgia does not impose a state-level inheritance tax or estate tax. A Georgia living trust is only subject to federal estate tax, not a state-level estate tax. However, federal estate tax still applies to estates above the federal exemption threshold, which is $15 million per individual in 2026. If you’re inheriting from someone in another state, that state’s rules may apply, so it’s worth checking with an attorney.

Can I put inherited money directly into a trust?

Yes. You can fund a trust with inherited cash, investment accounts, real estate, and other assets. The key is making sure the trust is properly drafted and funded. Under O.C.G.A. § 53-12-23, a trust may be created for any lawful purpose, which gives you a lot of flexibility. However, you should think carefully about the tax consequences before transferring assets, especially if the assets have already received a step-up in basis.

What happens to my inherited assets if I’m sued after receiving them?

If you hold inherited assets in your own name, they are generally reachable by your creditors. Placing them into a properly structured irrevocable trust can help protect them. An irrevocable trust provides asset protection, safeguarding the trust’s property from creditors and potential legal claims against the settlor. The timing of when you set up the trust matters, so it’s best to act before any legal threats arise.

What is a step-up in basis, and does it apply to assets I inherit through a trust?

A step-up in basis means the cost basis of inherited assets is reset to the fair market value at the date of the original owner’s death. This can eliminate capital gains taxes on years of appreciation. However, according to IRS Revenue Ruling 2023-2, assets held in an irrevocable grantor trust that are not included in the decedent’s gross estate do not receive this step-up. If the assets were transferred to the trust as a completed gift during the grantor’s lifetime, the original basis carries over. This is a nuanced area of tax law, and getting it right requires careful planning with a qualified attorney.

How soon after inheriting money should I contact an estate planning attorney?

As soon as possible. Life events such as marriage, divorce, birth or adoption of children, death of a beneficiary or executor, or significant changes in wealth can all necessitate updates to an estate plan. Inheriting money is exactly that kind of significant change. Acting quickly gives you the most options and helps you avoid costly mistakes. The team at Slowik Estate Planning in Atlanta, Georgia is ready to help you take the right next steps.

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