When replacing at 15A breaker in the ATS with a 20A breaker, you will need to replace the #14 conductors that run to your main panel (colored hot and white neutral) with #12 conductors.
When replacing a 240V double breaker with two single 120V breakers you will need to add two appropriatately sized white neutral wires from the ATS to your main panel (because Generac doesn't provide a neutral for the 240V circuits, nor would one be needed for an air conditioner or water heater.)
Thanks, I plan on replacing the 240V breaker with two 120v breakers and will add neutrals. I will be replacing a 15 amp breaker with a 15 amp AFCI for my bedroom. Otherwise the transfer switch will remain as delivered.