When setting up a trust, it’s important to understand what you are committing to and the future implications of those commitments. One of the most important considerations is whether your trust will be revocable or irrevocable.
A revocable trust gives you the ability to amend or terminate the trust and remove property at any time prior to your death, so long as you are mentally competent. Amending or terminating an irrevocable living trust can be much harder to accomplish.
Why would someone create a trust that they might not be able to amend or terminate in the case of an unforeseen incident?
The Benefits of Irrevocable Trusts
Essentially, when a person places assets such as a business, insurance policy, investment, etc. into an irrevocable trust, the trust becomes the owner of the assets. While this relinquishes some of their decision-making power over the asset, it can also result in great benefits for themselves and their estate that revocable trusts do not provide:
- Transfers all incidents of ownership of estate assets from the grantor to the trust itself, removing them from the grantor’s taxable estate
- May relieve the grantor of tax liability on any income generated by trust assets
- Trust assets are untouchable in the event of a lawsuit against the grantor
What Is Trust Decanting?
Trust decanting is one of the options Georgia law provides options for amending an irrevocable trust.
Trust decanting is the process of redistributing assets from the original irrevocable trust to a new trust with updated terms. Some or all of the assets of the old trust are then “distributed” to the new trust and administered under the terms of the new trust.
There are many factors that determine whether a decanting is a viable option for those wanting to change the way assets are administered under their irrevocable trust. And even where decanting is available, the likelihood that conflicts between beneficiaries and trustees will result should always be considered.
If you encounter a dispute involving an estate, will, or trust, contact us at 404.892.9797.
Gaslowitz Frankel LLC is Georgia’s premier fiduciary litigation law firm. Our legal team specializes in all aspects of fiduciary disputes, representing individuals, executors, trustees, investors, shareholders, and financial institutions in complex fiduciary disputes involving wills, estates, trusts, guardianships, businesses, investments, and securities.
