If you’ve been wondering, “Does a revocable trust protect assets?” you’re asking the right question.
Many families believe a revocable living trust will shield their home, rentals, or savings from lawsuits and creditors.
No, a revocable trust does not give you asset protection.
A Georgia revocable trust is powerful for avoiding probate and planning for incapacity—but it offers no protection against lawsuits, medical bills, or creditors.
In this article, we’ll explain exactly why Georgia law works this way, the hidden risks most people miss, and what strategies actually keep your wealth safe.
First, What a Revocable Trust Really Does
A revocable living trust is a legal container you create to hold property—homes, rentals, bank accounts—during your lifetime.
You stay in charge: you can change it, add or remove property, or dissolve it anytime.
Its main purpose is avoiding probate and planning for incapacity, not shielding assets from lawsuits.
Plain-English Recap: A revocable trust organizes your property and keeps it private after death. But if you get sued, creditors can still reach inside it.
Why It Fails for Asset Protection (The “Why” Behind the Law)
The weakness comes down to one principle: dominion and control.
Retained Control Equals Ownership
- Georgia law (O.C.G.A. § 53-12-82(a)(2)(A)) says that while you’re alive, assets in a revocable trust are fully open to your creditors.
- Creditors can even force you to revoke the trust so they can seize what’s inside.
The IRS Sees It the Same Way
- Under 26 U.S.C. § 676(a), if you can revoke the trust and pull the assets back, the IRS treats you as the owner for tax purposes.
- Federal tax law and Georgia creditor law agree: if you can take it back, you still own it.
After Death, Creditors Still Get In
- If your probate estate doesn’t cover debts, O.C.G.A. § 53-12-82(a)(2)(C)(i) lets creditors claim assets from your trust.
Plain-English Recap: If you can revoke it, amend it, or use the money, the law says it’s still yours—and creditors can take it.
FAQs About Revocable Trusts and Asset Protection
These are questions people commonly ask us when creating a revocable trust.
Does a revocable trust protect assets from creditors in Georgia?
No. Georgia law makes it clear: creditors can reach into your revocable trust during your life and even after death if your estate can’t cover debts.
What about spendthrift clauses—don’t they stop creditors?
Spendthrift protections in Georgia (O.C.G.A. § 53-12-80) only shield beneficiaries, not the person who created the trust. If you’re the grantor, those protections don’t apply to you.
Is my trust safe if I transfer assets into it after I’ve been sued?
No. Transfers made to avoid creditors can be undone under Georgia’s Uniform Voidable Transactions Act (O.C.G.A. § 18-2-70).
Common Misunderstandings and Hidden Risks
- “It becomes safe when I die.”
Not right away. Creditors can still go after trust assets if your probate estate is too small. - “I can add last-minute protections.”
Transfers made while under threat of a lawsuit can be reversed as fraudulent. - “If it’s in the trust, it’s untouchable.”
Wrong. Courts treat your revocable trust as if it’s still in your personal pocket.
Plain-English Recap: Neither clauses nor timing tricks stop creditors once a lawsuit is in play.
The Real Tools for Protecting Wealth
To shield assets, you need tools other than a revocable trust:
- Irrevocable trusts: Unlike revocable trusts, these can protect assets if set up properly. Georgia does not allow self-settled Domestic Asset Protection Trusts (DAPTs), but other states and offshore options exist.
- LLCs and partnerships: Essential for rental properties or business interests. They create a legal wall between personal and business liabilities.
- Statutory exemptions: Certain accounts like ERISA-qualified retirement plans or pensions are protected by federal law.
Plain-English Recap: Real protection means giving up some control or using legal entities and exemptions that the law itself defends.
Next Steps to Secure Your Estate
- Review your current trust. Understand what it does—and doesn’t—protect.
- Map your risks. Lawsuits, medical bills, and business liabilities each require different solutions.
- Talk with a Georgia estate-planning attorney. The right structures—LLCs, irrevocable trusts, or exempt accounts—can safeguard your wealth.
Recap: A revocable trust is great for probate avoidance and incapacity planning, but not for lawsuit protection. If you want real shields, you need stronger tools.
Bottom Line
A revocable living trust in Georgia is powerful for probate and incapacity planning, but it offers no protection from lawsuits or creditors.
With the right planning, however, you can replace worry with a clear, reliable strategy to protect your family’s wealth.