Common Irrevocable Trust Structures

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When most people in Atlanta think about protecting their assets and passing wealth to the next generation, they picture a simple will. But a will only goes so far. If you want real control over what happens to your estate, an irrevocable trust may be one of the most powerful tools available to you. At Slowik Estate Planning, located in Atlanta, Georgia, we work with families and individuals to build estate plans that are grounded in Georgia law and tailored to their specific goals. Understanding the most common irrevocable trust structures is a great starting point.

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What Is an Irrevocable Trust Under Georgia Law?

Before we look at specific trust structures, it helps to understand what makes a trust “irrevocable” in Georgia. Under the Revised Georgia Trust Code of 2010, found at O.C.G.A. Title 53, Chapter 12, Georgia law governs how trusts are created, modified, and terminated. Article 3 of that code (O.C.G.A. §§ 53-12-40 through 53-12-45) addresses revocation, modification, and termination of trusts. Article 4 (O.C.G.A. §§ 53-12-60 through 53-12-65) covers further modification and termination rules.

So what does “irrevocable” actually mean for you? When you place assets into an irrevocable trust, you give up legal ownership of those assets. You transfer them to a trustee, who then manages and distributes them according to the trust’s terms. You generally cannot take those assets back or change the trust on your own. Modifications or terminations generally require the consent of all qualified beneficiaries and, in many cases, court approval under the Georgia Trust Code.

Why would anyone want to give up that control? Because doing so can offer serious benefits. Creditors cannot access what you no longer legally own. Irrevocable trusts can reduce or eliminate estate taxes for high-net-worth families. In Georgia, assets placed in certain irrevocable trusts may be exempt when applying for long-term care under Medicaid rules. That trade-off, control for protection, is at the heart of every irrevocable trust strategy. Knowing which structure fits your situation is where Slowik Estate Planning can help.

Irrevocable Life Insurance Trusts (ILITs)

An Irrevocable Life Insurance Trust, commonly called an ILIT, is one of the most widely used irrevocable trust structures in Atlanta and across Georgia. The basic idea is straightforward. Instead of owning a life insurance policy yourself, you place it inside an irrevocable trust. The trust owns the policy, and when you pass away, the death benefit is paid to the trust, not directly to your estate.

Why does that matter? By owning a life insurance policy within an irrevocable trust, the proceeds from the policy are not included in the estate, and thus, they are not subject to estate taxes. This ensures beneficiaries receive the full amount of the life insurance benefit tax-free, providing essential liquidity for estate obligations without diminishing an estate’s value.

Think about a family business owner in Atlanta who has a $3 million life insurance policy. If that policy is in the owner’s name, the $3 million gets added to the taxable estate. Inside an ILIT, those proceeds pass to the family without being counted as part of the estate. Typically, ILITs are funded by purchasing new policies, which avoid the three-year look-back period associated with the transfer of existing policies.

Under O.C.G.A. § 53-12-20 through § 53-12-28 (Article 2 of the Revised Georgia Trust Code), Georgia law recognizes express trusts like ILITs, provided they meet the basic requirements for trust formation. The trustee of an ILIT has clear duties under Article 11 (O.C.G.A. §§ 53-12-200 through 53-12-221), which governs trustee responsibilities. Proper trust administration is critical to keeping the ILIT valid and effective over time. If you have a large life insurance policy or are considering purchasing one, an ILIT may be worth discussing with Slowik Estate Planning.

Medicaid Asset Protection Trusts (MAPTs)

Long-term care is expensive. In Georgia, nursing home costs can easily exceed $7,000 to $9,000 per month. Medicaid can help cover those costs, but qualifying for Medicaid requires meeting strict asset limits. A Medicaid Asset Protection Trust, or MAPT, is an irrevocable trust designed to help Georgians protect their assets while still working toward Medicaid eligibility.

Here is how it works. You transfer assets, often a home or savings, into the MAPT. Because you no longer own those assets, they may not count against you when Medicaid evaluates your eligibility. But there is a critical timing rule. The best time to establish a Medicaid Asset Protection Trust is at least five years before applying for Medicaid while the grantor is still in good health. If you wait until a health crisis strikes, it is too late. The five-year clock starts ticking the day assets are transferred into the irrevocable trust, not the day the trust is created.

Georgia’s Medicaid rules follow federal guidelines under the Deficit Reduction Act, and the five-year lookback period is strictly enforced. Transfers made within that window can result in a penalty period during which Medicaid will not cover your care. Planning early is the key.

It is also important to understand that a MAPT is different from a revocable living trust. A revocable living trust will not help anyone qualify for Medicaid or government benefits. The reason is that, under a revocable living trust, the trust maker still has the ability to control their assets, either by managing their distribution or by revoking the trust and having the assets revert to them. An irrevocable MAPT, properly drafted, removes that control and may help you qualify. If you or a loved one may need long-term care in the future, contact Slowik Estate Planning in Atlanta, Georgia to discuss whether a MAPT fits your situation.

Charitable Remainder Trusts and Charitable Lead Trusts

Georgia law specifically addresses charitable trusts under Article 9 of the Revised Georgia Trust Code (O.C.G.A. §§ 53-12-170 through 53-12-175). If you have charitable goals alongside your estate planning goals, two irrevocable structures are worth knowing: the Charitable Remainder Trust (CRT) and the Charitable Lead Trust (CLT).

A Charitable Remainder Trust lets you transfer appreciated assets, like stocks or real estate, into an irrevocable trust. The trust then pays you (or another beneficiary) income for a set period. When that period ends, the remaining assets go to a charity you choose. This structure can reduce capital gains taxes on appreciated assets, provide you with income, and support a cause you care about. The grantor transfers assets into an irrevocable trust, receiving a charitable or estate tax deduction for the calculated present value of the charitable payments.

A Charitable Lead Trust works in the opposite direction. Charitable Lead Trusts focus on providing immediate support to charitable organizations through annual payments for a specified period or a lifetime, with the remaining assets eventually passing to non-charitable beneficiaries. The grantor transfers assets into an irrevocable trust, receiving a charitable or estate tax deduction for the calculated present value of the charitable payments. At the end of the trust term, the remaining assets in the trust are typically distributed to non-charitable beneficiaries, such as family members or heirs.

Both structures can play a role in Estate Tax Planning in Atlanta Georgia. They reduce the taxable estate while supporting meaningful causes. If you have appreciated assets or philanthropic interests, Slowik Estate Planning can help you decide which charitable trust structure makes sense for your family.

Spousal Lifetime Access Trusts (SLATs) and Intentionally Defective Grantor Trusts (IDGTs)

Two irrevocable trust structures have become increasingly popular for married couples and high-net-worth individuals in Atlanta: the Spousal Lifetime Access Trust (SLAT) and the Intentionally Defective Grantor Trust (IDGT). Both are powerful tools for reducing taxable estates while keeping assets working for your family.

A SLAT is an irrevocable trust that one spouse creates for the benefit of the other. SLATs offer a strategic avenue for one spouse to support the other while also achieving estate tax savings. By establishing a SLAT, assets are transferred into an irrevocable trust for the benefit of the spouse and potentially other family members. The assets leave the creating spouse’s taxable estate, but the other spouse can still benefit from them. This gives families a way to reduce estate tax exposure without completely losing access to the wealth.

An IDGT is a trust that is “defective” for income tax purposes but effective for estate tax purposes. Single individuals can realize the same estate and gift tax benefits through a strategy called an Intentionally Defective Grantor Trust (IDGT). Because the grantor is still treated as the owner for income tax purposes under IRC Section 671, the grantor pays the income taxes on trust earnings. This is actually a benefit, because paying those taxes further reduces the taxable estate without being treated as an additional gift.

However, there is an important tax consideration with IDGTs. Under IRS Revenue Ruling 2023-2, if the trust assets are not included in the grantor’s taxable estate, those assets do not receive a step-up in cost basis at the grantor’s death. That means heirs may face capital gains taxes on appreciation that occurred during the grantor’s lifetime. This is a real planning consideration that Slowik Estate Planning can help you think through carefully.

The estate and gift tax exemption is $15 million per individual for 2026 gifts and deaths, up from $13.99 million in 2025. This increase means that a married couple can shield a total of $30 million without paying any federal estate or gift tax. Even with these higher exemptions, SLATs and IDGTs remain valuable tools for removing future asset appreciation from your estate. If you have international assets or beneficiaries abroad, International Estate Planning considerations may also affect how these trusts are structured.

Generation-Skipping Trusts and Dynasty Trusts

What if you want to protect wealth not just for your children, but for your grandchildren and beyond? That is exactly what generation-skipping trusts and dynasty trusts are designed to do. These irrevocable structures let you pass assets across multiple generations while reducing the estate and gift taxes that would otherwise apply at each generational transfer.

A generation-skipping trust is a specialized trust designed to distribute assets to beneficiaries at least two generations below the grantor, such as grandchildren or great-grandchildren. By bypassing the grantor’s children as direct beneficiaries, this trust aims to preserve wealth for the younger generation, potentially reducing or avoiding estate taxes.

A dynasty trust takes that concept even further. Dynasty trusts, also known as generation-skipping tax (GST) trusts, are designed for long-term preservation of assets across multiple generations, with the benefit of avoiding 40% estate and GST taxes with each generational transfer. The generation-skipping transfer tax exemption, which applies to transfers to grandchildren and other “skip” persons, also rises to $15 million. This alignment simplifies planning and enhances opportunities for multigenerational wealth transfers.

Under O.C.G.A. Article 5 (§§ 53-12-80 through 53-12-83), Georgia law also recognizes spendthrift provisions, which can be built into a generation-skipping or dynasty trust. A spendthrift clause prevents beneficiaries from assigning their interest in the trust to creditors. This adds a layer of protection for younger family members who may not yet have the financial experience to manage large inheritances. Working with an Asset Protection Lawyer at Slowik Estate Planning ensures these provisions are drafted correctly under Georgia law.

Trustee duties for long-term trusts like these are governed by Articles 11 and 16 of the Revised Georgia Trust Code, including trust investment rules under O.C.G.A. §§ 53-12-340 through 53-12-364. Trustees must follow the prudent investor standard, diversify trust assets, and act in the best interests of all beneficiaries across generations. Proper drafting of wills and trust documents from the start is essential to making these long-term structures work as intended.

If building lasting, multi-generational wealth is one of your goals, Slowik Estate Planning in Atlanta, Georgia can help you explore whether a generation-skipping or dynasty trust fits your estate plan. Every family’s situation is different, and the right structure depends on your assets, your family, and your goals. Reach out to our office today to start the conversation.

FAQs About Common Irrevocable Trust Structures in Atlanta, Georgia

Can I change an irrevocable trust after it is created in Georgia?

Generally, you cannot change an irrevocable trust on your own after it is created. Under the Revised Georgia Trust Code (O.C.G.A. § 53-12-61), modifications may be possible in limited circumstances, such as with the agreement of all qualified beneficiaries and, in some cases, court approval. This is why careful drafting from the start is so important. Slowik Estate Planning works with clients in Atlanta to make sure the trust terms are right before the trust is signed.

Does Georgia have a state estate tax that affects irrevocable trust planning?

Georgia does not impose a separate state estate tax. The federal estate tax exemption for 2026 is $15 million per individual, meaning most Georgia families will not owe federal estate tax either. However, the federal estate tax rate remains 40% on amounts above the exemption, and future legislative changes could affect these numbers. Irrevocable trusts can still serve important purposes beyond tax savings, including asset protection, Medicaid planning, and controlling how wealth is distributed to future generations.

What is the difference between a grantor trust and a non-grantor trust for income tax purposes?

A grantor trust is one where the person who created the trust (the grantor) is still treated as the owner for federal income tax purposes under IRC Section 671. The grantor reports the trust’s income on their personal tax return. A non-grantor trust is a separate tax entity and files its own tax return. This distinction matters because, under IRS Revenue Ruling 2023-2, assets in an irrevocable grantor trust that are not included in the taxable estate will not receive a step-up in cost basis at the grantor’s death. Choosing the right tax treatment for your trust requires careful planning, and Slowik Estate Planning can help you think through these trade-offs.

How does a spendthrift provision work in a Georgia irrevocable trust?

A spendthrift provision is a clause in a trust that prevents a beneficiary from transferring their interest in the trust to someone else, including creditors. Under O.C.G.A. §§ 53-12-80 through 53-12-83, Georgia law recognizes and enforces spendthrift provisions in both discretionary and other trust structures. This means that if a beneficiary has debts or faces a lawsuit, creditors generally cannot reach the trust assets before they are distributed. This protection makes spendthrift provisions a common feature in irrevocable trusts designed to protect younger or financially vulnerable beneficiaries.

How do I know which irrevocable trust structure is right for my family?

The right trust structure depends on your specific goals, the size and type of your assets, your family situation, and your long-term plans. An ILIT may be the right choice if life insurance is a major part of your estate. A MAPT may be the priority if long-term care is a concern. A SLAT or IDGT may make sense for high-net-worth married couples focused on estate tax reduction. A generation-skipping trust may be the best fit if building multigenerational wealth is your goal. The best way to find out is to speak with Slowik Estate Planning in Atlanta, Georgia. We can review your situation and help you build a plan that works for your family.

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