You’ve probably heard that a revocable living trust is the “gold standard” of estate planning in Georgia. Friends, family, and even financial advisors often praise them for avoiding the dreaded probate process.
But you’re smart to be skeptical. You’re asking the right question: “What’s the catch?”
The truth is, while trusts are powerful tools, they are not a perfect fit for everyone. For some Georgians, the disadvantages of a revocable living trust can outweigh the benefits, leading to unexpected costs, legal headaches, and a false sense of security.
This guide will walk you through the 7 biggest drawbacks so you can make a truly informed decision.
Watch: The Hidden Disadvantages of a Revocable Trust (That No One Warns You About)
Before you assume a revocable trust is the perfect solution, watch this video to uncover the hidden drawbacks most attorneys never mention. You’ll learn how funding mistakes, tax surprises, and false security can turn a “simple” trust into an expensive problem for your family.
1. The High Upfront Cost and “Funding” Headache
The first major drawback is the cost of a revocable living trust.
- Higher Attorney Fees: Drafting a trust is far more complex than a simple will. This means a Georgia estate planning attorney will charge significantly more for the comprehensive legal work involved.
- The Chore of “Funding”: A trust is an empty box until you fill it. You must legally transfer ownership of your assets into the trust’s name. This process, known as “funding,” is tedious and involves paperwork with your bank, the county courthouse for your home, the DMV, and your financial advisor. Many people underestimate this significant time commitment.
A common and costly mistake is paying for a trust and then failing to fund it, rendering it useless.
2. Zero Protection From Creditors (A Common Myth)
Let’s be clear: a revocable living trust does not offer asset protection from creditors in Georgia.
Because you can change the trust or reclaim your assets at any time (it’s “revocable”), the law considers the assets as yours. If you are sued or accumulate debt, creditors can and will go after the assets inside your trust.
Key Takeaway: A revocable trust helps avoid probate, not lawsuits or creditors. For true asset protection, an irrevocable trust is required, which means giving up control of your assets.
3. No Tax Savings or Benefits
Another of the most misunderstood disadvantages of a revocable living trust is that it provides no tax benefits.
- Income Tax: All income from assets in the trust (like dividends or interest) is still reported on your personal tax return. The trust doesn’t save you a penny in income taxes.
- Estate Tax: Your trust assets are still counted as part of your estate for federal estate tax purposes. While Georgia has no state estate tax, a trust won’t help you avoid the federal one.
Think of it as tax-neutral. It doesn’t hurt you, but it certainly doesn’t help you with taxes.
4. Ongoing Administrative Burdens
Owning assets in a trust can create administrative headaches during your lifetime.
For example, if you want to refinance the mortgage on your home in Fulton County, the lender may require you to take the house out of the trust, complete the refinancing, and then put it back in.
This creates extra steps, potential fees, and the risk of forgetting to retitle it back into the trust.
5. You Still Absolutely Need a Will
It’s a myth that a trust replaces a will. In fact, a complete Georgia estate plan that includes a trust must also include a special type of will called a “pour-over will.”
This will acts as a safety net. It’s designed to “catch” any assets you forgot or failed to put into your trust and “pour” them into it after your death. The problem? Any assets caught by this will must first go through the very probate process you were trying to avoid!
6. Problems with Medicaid Eligibility in Georgia
If you are planning for long-term care and potential Medicaid assistance, a revocable trust is a drawback.
In Georgia, assets held in a revocable trust are considered “countable assets” by Medicaid. This means they will count against you when determining your eligibility, potentially forcing you to spend them down before you can receive benefits.
7. A False Sense of Security
Perhaps the biggest disadvantage of all is that an improperly managed trust creates a false sense of security.
You might spend thousands of dollars and believe your affairs are in order. But if you haven’t funded it correctly or kept it updated, your family will be left with an expensive, useless document and will end up in probate court anyway.
Revocable Trust vs. Will in Georgia: Key Drawbacks
| Feature | Revocable Living Trust | Simple Will |
|---|---|---|
| Upfront Cost | Higher — attorney fees and funding required | Lower — simple to draft |
| Privacy | Private document | Becomes public after probate |
| Creditor Protection | None | None |
| Probate | Avoids probate (if properly funded) | Must go through probate |
| Complexity | More complex — setup and maintenance | Simple — just sign and store |
How To Keep Your Assets Private With A Trust
Who Should Think Twice About a Revocable Trust in Georgia?
You may want to reconsider a revocable trust if:
- Your Estate is Small and Simple: If you have minimal assets and no complex family situations, the cost and hassle may not be worth the benefit of avoiding Georgia’s relatively straightforward probate process.
- You Lack the Time or Discipline to Fund It: If you are not committed to the detailed work of retitling all your assets, the trust will not work as intended.
- Your Primary Goal is Asset Protection: A revocable trust offers no protection from lawsuits or creditors.
FAQs About The Disadvantages
Here are the main concerns people have with revocable trusts.
What are the main problems with a revocable living trust in Georgia?
The main problems are the high upfront costs (~$3,500), the significant effort required to fund and maintain the trust, the complete lack of creditor protection, and the fact that it offers no tax advantages.
Can a house in a revocable trust be sold?
Yes, as the trustee, you retain full control and can sell, mortgage, or manage the house just as you would if you owned it personally. However, it can sometimes involve extra paperwork with the title company.
Why would I choose a will over a trust in Georgia?
You might choose a will if your primary concerns are cost and simplicity. If your estate is modest and you aren’t concerned about the probate process being public, a will is a much less expensive and complex option.
Ready for a Plan That Actually Works?
Understanding the disadvantages of a revocable living trust is the first step toward building an estate plan that truly protects your family.
Don’t rely on myths or one-size-fits-all advice. Contact our Atlanta estate planning law firm today for a clear, honest assessment of whether a trust, a will, or a combination of tools is right for your unique situation.