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Georgia estate planning benefits from trust decanting

As part of estate planning, an individual (called the grantor) may set up an irrevocable trust to grant tax advantages to his or her estate, and she or he may also confer other desirable benefits to beneficiaries named in the irrevocable trust.

There was a time when the termination or change in trust terms required very specific conditions. Upon the grantors' death, the irrevocable trust becomes non-modifiable unless specific circumstances dictate otherwise. Even then, irrevocable trust changes require expensive and protracted court action.

Modifying a trust without going to court

Georgia's HB 121 trust code amendment, signed into law on May 3, 2018, provides a means of changing an irrevocable trust that no longer serves the grantor's original intention or confers the ability to rectify drafting errors without requiring a court appeal.

The term "decanting" indicates that the original irrevocable trust is "poured" into a new trust, leaving behind the unwanted portions of the original trust. This new ability allows the trustee, on behalf of trust beneficiaries, to modify an existing trust by pouring it into a new or second trust, including specifications that increase trust advantages in light of shifting tax laws or other changes that removed some or all the grantor's intended advantages.

Provisions of Georgia's trust decanting law

Decanting an original (first) trust into a new (second) trust includes granting the following benefits: 

  • Modification to take advantage of changing tax laws in keeping with the grantor's original wish for tax benefits
  • Dividing one trust into more than one, or consolidating several trusts into one to simplify administration
  • Achieve the grantor's purpose when unforeseen circumstances arise that would negatively affect the grantor's wishes
  • Appoint an additional trustee, or set up a special fiduciary administrator for the trust if trust administration would benefit

Those thinking about estate planning or who already have an existing plan may want to discuss possible advantages to their beneficiaries through the use of Georgia's powerful new trust decanting amendment. 

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