When Trust Administration Still Requires Probate

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A trust is one of the most powerful tools in estate planning. Many Atlanta families set one up specifically to avoid probate. But here’s the thing: a trust does not always keep your estate out of the probate court. There are real situations where trust administration still requires probate in Georgia, and knowing those situations can save your loved ones a lot of time, money, and stress. At Slowik Estate Planning in Atlanta, Georgia, we help families understand exactly where the gaps in their plan might be, and how to close them before it is too late.

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How a Trust Is Supposed to Work in Georgia

Before we talk about when probate is still required, let us cover the basics. A trust is a legal arrangement where one person, called the grantor, transfers assets to a trustee to manage for the benefit of others, called the beneficiaries. Under the Revised Georgia Trust Code of 2010, found in O.C.G.A. Title 53, Chapter 12, trusts are governed by a detailed set of rules covering everything from trustee duties to how trust administration must be carried out.

The main reason people create a revocable living trust is simple: they want to avoid probate. A trust is a document, like a will, that distributes a person’s property after they die. Unlike a will, a trust does not have to go through probate. That is the promise. Assets held inside a properly funded trust pass directly to beneficiaries without court involvement. The successor trustee steps in, follows the trust’s instructions, and handles the distribution. No judge, no public filings, no waiting in line at the probate court.

But that promise only holds if the trust is set up and maintained correctly. The Revised Georgia Trust Code under O.C.G.A. § 53-12-240 through § 53-12-292 lays out how a trust must be administered. When those rules are not followed, or when the trust is missing assets, the probate court may still get involved. Understanding the difference between a well-funded trust and a poorly maintained one is critical. Working with a qualified estate planning attorney in Atlanta from the start is the best way to make sure your trust actually does what you intend it to do.

The Unfunded Trust Problem

This is the most common reason trust administration still ends up in probate court. You can have a beautifully drafted trust document, signed, notarized, and filed away safely, but if assets were never transferred into the trust, it is essentially an empty shell. Georgia law is clear on this point: a trust only controls assets that are legally titled in the trust’s name.

Think about it this way. Imagine someone creates a trust in 2020, names their children as beneficiaries, and then passes away in 2026. The trust document looks perfect. But the family home was never re-deeded into the trust’s name. The bank account still reads the grantor’s name alone. The brokerage account was never retitled. Every one of those assets is now a probate asset, because the trust never legally owned them.

A trust only controls assets that are properly transferred into it. Assets left outside the trust may still require probate. Real estate transfers often involve additional legal steps, and errors in drafting or funding can affect how the trust functions. Under O.C.G.A. Title 53, Chapter 5, the probate court in Georgia has jurisdiction over these assets, and the family will need to open a probate estate to transfer them.

This is why funding a trust is not a one-time event. Every time you buy a new property, open a new account, or acquire a significant asset, you need to check whether it belongs in the trust. A pour-over will can help catch assets that slip through, but those assets still go through probate before reaching the trust. This type of will is known as a “pour-over” will, meaning that any other asset not included in your trust pours over into your trust to be administered accordingly. That is still a probate proceeding, just a smaller one.

When Assets Are Left Outside the Trust

Even families with well-funded trusts can end up in probate if certain assets were intentionally or accidentally left outside the trust. Some assets simply cannot be placed in a trust, and others are commonly overlooked. Knowing which ones fall into this category helps you plan around them.

Assets that have a named beneficiary, such as bank accounts, retirement accounts, or life insurance policies, do not need to go through probate before they are distributed. That is good news. But what about assets that have no beneficiary designation and are not in the trust? Those go through probate under O.C.G.A. Title 53, Chapter 6, which governs administrators and personal representatives in Georgia.

Common examples include a car titled only in the deceased person’s name, a bank account opened after the trust was created, or real estate in another state that was never transferred. If you own real estate in more than one state, a living trust can eliminate the need for multiple probate proceedings in each state in which the property is located. But if that out-of-state property was never placed in the trust, you may face probate in both Georgia and the other state.

Retirement accounts like IRAs and 401(k)s present another situation. Retirement accounts such as 401(k)s or IRAs by law are not allowed to be owned by a trust entity. Because you can still designate beneficiaries on those accounts, the proceeds can be distributed directly to your named beneficiaries rather than having to go through probate. The key word there is “named.” If you never updated your beneficiary designation, or if the named beneficiary has already passed away, the account may end up in your probate estate. Proper coordination between your trust and your beneficiary designations is essential. An Atlanta estate planning lawyer at Slowik Estate Planning can review all of your accounts and make sure nothing is left to chance.

Probate and the Step-Up in Basis Issue Under Federal Law

Here is a situation that catches many families off guard. Even when a trust is properly funded, there are times when probate may actually be beneficial from a tax standpoint. This comes down to a federal tax rule called the step-up in basis under Internal Revenue Code Section 1014.

Under I.R.C. § 1014(a)(1), when a person inherits property from a decedent, the cost basis of that property is generally stepped up to the fair market value at the date of death. This can significantly reduce capital gains taxes when the beneficiary later sells the inherited asset. But here is the critical point: the IRS issued Rev. Rul. 2023-2, which clarifies that assets held in an irrevocable grantor trust do not automatically receive this step-up in basis at death.

The ruling explains that for property to receive a basis adjustment under § 1014(a), it must be acquired or passed from a decedent and fall within one of the specific categories listed in § 1014(b). Assets in an irrevocable trust that are not included in the grantor’s gross estate for federal estate tax purposes under Chapter 11 of the Internal Revenue Code do not qualify. As the ruling states, “property transferred in trust prior to the decedent’s death is not bequeathed or inherited because it did not pass either by will or intestacy.”

What does this mean practically? If a grantor placed highly appreciated assets into an irrevocable trust, those assets may not get the step-up in basis that probate assets would receive. In some cases, going through probate, or structuring the estate plan to include certain assets in the probate estate, can actually save the family significant taxes on future sales. This is a nuanced planning consideration that requires careful analysis. The trust administration team at Slowik Estate Planning can help you weigh these trade-offs before making decisions about your irrevocable trust.

Creditor Claims, Will Contests, and Court Supervision

Even when a trust is fully funded, there are circumstances where the probate court in Georgia still gets involved. Creditor claims are one of the most common reasons. Under O.C.G.A. Title 53, Chapter 7, Georgia law governs the administration of estates generally, including the process for paying valid debts. If a decedent had significant debts, creditors may challenge whether trust assets should be used to satisfy those debts.

Georgia courts have recognized that a revocable trust does not shield assets from creditors during the grantor’s lifetime. Under O.C.G.A. § 53-12-82, property in a revocable trust is still considered the grantor’s property for purposes of creditor claims. If debts exceed the probate estate, creditors may petition the court to reach trust assets, which can pull the trust into court proceedings.

Will contests are another trigger. If someone challenges the validity of a pour-over will or claims the trust itself was created under undue influence or fraud, the probate court under O.C.G.A. Title 53, Chapter 11 has jurisdiction to hear those disputes. In Georgia, probate generally takes about a year to complete. A contested probate can stretch far longer, sometimes years, and can tie up both the probate estate and the trust assets simultaneously.

There are also situations involving minor beneficiaries or individuals with special needs where the probate court may need to appoint a guardian or conservator before trust assets can be distributed. If your estate plan includes pet guardianships or provisions for dependents who cannot manage assets on their own, court oversight may be required regardless of the trust’s terms. Slowik Estate Planning helps clients think through all of these scenarios when building a comprehensive estate plan.

Testamentary Trusts Always Require Probate

Many people do not realize that not all trusts are created equal when it comes to probate. A revocable living trust is designed to avoid probate. But a testamentary trust, which is a trust created inside a will, must go through probate before it can be established and funded. This is a fundamental distinction that affects many families in Atlanta.

Under O.C.G.A. Title 53, Chapter 12, Article 6, which covers testamentary additions to trusts, these trusts come into existence only after the will is admitted to probate. The will must first be validated by the probate court under O.C.G.A. Title 53, Chapter 5. Only then can the assets flow into the trust. This means the family still faces all the time and cost of probate, including filing fees, court appearances, and creditor notification periods, before the trust can even begin operating.

Why would someone choose a testamentary trust? They are often used when a grantor wants to leave assets to minor children but does not want those children to receive a lump sum at age 18. The trust holds the assets and distributes them according to the grantor’s instructions, perhaps at ages 25, 30, and 35. That is a sound goal. But the path to get there still runs through the probate court.

If probate avoidance is your priority, a revocable living trust is the better tool. If a testamentary trust fits your goals, you should go in with clear expectations about the probate process. Whether probate is necessary depends on what the deceased person owned at the time of their death and how they owned it. The same principle applies to how a trust is structured. The trust beneficiaries you name deserve a plan that is built with their real interests in mind, not just a document that looks good on paper. Contact Slowik Estate Planning in Atlanta, Georgia, to review your current plan and make sure it actually does what you think it does.

FAQs About Trust Administration and Probate in Georgia

Does a revocable living trust always avoid probate in Georgia?

Not always. A revocable living trust avoids probate only for assets that are properly titled in the trust’s name. If you created a trust but never transferred your home, bank accounts, or other assets into it, those assets will still go through the Georgia probate process under O.C.G.A. Title 53, Chapter 5. The trust document alone is not enough. Funding the trust is the critical step that most people miss.

What happens if someone dies with both a trust and assets outside the trust?

The assets inside the trust pass to beneficiaries through trust administration, without probate. The assets outside the trust, those still titled in the decedent’s name alone, must go through probate. Many families use a pour-over will to direct those outside assets into the trust after probate, but that still requires a court proceeding. The goal is to minimize what is left outside the trust so that probate, if it happens at all, involves as little as possible.

Can creditors go after assets held in a trust in Georgia?

It depends on the type of trust. Under O.C.G.A. § 53-12-82, assets in a revocable trust are still considered the grantor’s property during their lifetime, which means creditors can reach them. After death, creditors may also petition the probate court to satisfy valid debts from trust assets if the probate estate is insufficient. Irrevocable trusts generally offer stronger protection, but the rules are specific and depend on how the trust was structured.

Does a testamentary trust avoid probate?

No. A testamentary trust is created inside a will and can only come into existence after the will is admitted to probate by a Georgia probate court. The estate must go through the full probate process, including creditor notification and court approval, before the trust is funded and can begin operating. If your main goal is to avoid probate, a revocable living trust is a more direct path than a testamentary trust.

Why would it ever make sense to let assets go through probate instead of a trust?

There are situations where probate assets may have a tax advantage. Under I.R.C. § 1014, assets that pass through a decedent’s probate estate and are included in the gross estate may receive a step-up in cost basis to fair market value at the date of death. As clarified in Rev. Rul. 2023-2, assets in certain irrevocable grantor trusts that are not included in the gross estate do not receive this step-up. For highly appreciated assets, this distinction can mean significant capital gains tax savings for heirs. A qualified estate planning attorney can help you decide which assets belong in a trust and which might be better handled through your estate.

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