Trust Decanting

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You set up an irrevocable trust years ago. Life was different then. Tax laws have changed, your family has grown, and the trust terms no longer fit your situation. Does that mean you’re stuck? Not necessarily. Trust decanting in Atlanta, Georgia gives trustees a powerful legal option to update an outdated trust, without going to court in many cases. At Slowik Estate Planning in Atlanta, Georgia, we help families understand how this process works and whether it makes sense for their specific situation. If you have a trust that no longer serves its purpose, keep reading. This page may be exactly what you’ve been looking for.

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What Is Trust Decanting and How Does It Work in Georgia?

Think about pouring wine from a bottle into a decanter. You pour out the good wine and leave the sediment behind. Trust decanting works the same way. It is the process of distributing assets from an old trust to a new trust with more favorable terms, like pouring liquid from a bottle into a decanter and leaving the unwanted residue behind.

In practical terms, “decanting” refers to a trustee’s distribution of trust property from an original trust to a second trust as an exercise of the trustee’s authority to invade the principal of the original trust for the benefit of one or more beneficiaries. The result? A new trust with updated terms that better reflect your current goals and family circumstances.

Georgia formally recognized trust decanting through HB 121, which was signed into law in 2018. Georgia’s Trust Code did not provide for a decanting statute until HB 121 passed. Today, the process is governed by O.C.G.A. § 53-12-62, which is part of the Revised Georgia Trust Code of 2010 found in Title 53, Chapter 12 of the Official Code of Georgia Annotated.

Under O.C.G.A. § 53-12-62, a trustee with authority to invade the principal of the original trust to make distributions to or for the benefit of one or more beneficiaries may exercise that authority by distributing all or part of the principal of the original trust to a trustee of a second trust. That second trust can be a brand-new document or an amended version of the original.

This is a significant tool for families in Atlanta and across Georgia. It allows a trustee to update trust terms without the cost and delay of going to court. If your trust is outdated, restrictive, or simply no longer fits your needs, decanting may offer a practical path forward. An estate planning attorney in Atlanta can review your trust and tell you whether decanting is a realistic option for you.

Georgia law sets clear rules for how trust decanting must be done. You cannot simply rewrite a trust however you like. There are boundaries, and understanding them matters before you take any action.

First, the trustee must have the authority to invade the principal of the original trust. Under O.C.G.A. § 53-12-62, the trustee’s power to distribute in the original trust can be fully discretionary or limited by an ascertainable standard, such as health, education, maintenance, and support, which is commonly known as the HEMS standard.

Second, there are strict rules about who can be a beneficiary of the new trust. The second trust shall not include as a current beneficiary any person that is not a current beneficiary of income or principal of the original trust, and shall not include as a beneficiary any person that is not a beneficiary of the original trust. In plain terms, you cannot use decanting to add new beneficiaries.

Third, notice is required. A trustee may exercise the power to decant without the consent of the settlor or beneficiaries, provided the trustee gives written notice to the settlor (if living), any trust director, and those persons entitled to annual reports. That notice must describe how the trustee intends to exercise the power, specify the proposed distribution date, and be delivered at least 30 days before the proposed distribution.

Fourth, the rule against perpetuities applicable to the original trust cannot be extended through the decanting, and the original trust cannot be held solely for charitable purposes. Additionally, under O.C.G.A. § 53-12-62(r), this code section shall not apply to charitable trusts.

These rules protect trust beneficiaries while still giving trustees meaningful flexibility. Getting the process right matters. Slowik Estate Planning in Atlanta, Georgia can walk you through each requirement and make sure your decanting is done properly under Georgia law.

Why Would You Decant a Trust? Common Reasons Atlanta Families Use This Tool

People create trusts with the best intentions. But life changes. Tax laws shift. Beneficiaries face new circumstances. A trust that was perfectly designed ten years ago may now create problems instead of solving them. That is exactly why Georgia’s decanting statute exists.

Here are some of the most common reasons families in Atlanta choose to decant a trust:

  • Fixing drafting errors. Decanting permits trustees to amend the conditions of an existing irrevocable trust by depositing the assets into a new trust with modified terms, in addition to resolving ambiguities or clarifying trust wording. Decanting a trust can also be used to correct drafting errors, extend the life of the trust, and for asset protection.
  • Updating for tax law changes. Federal and state tax laws change over time. Decanting allows a trustee to update trust terms to align with the grantor’s original tax goals under current law.
  • Improving asset protection. Decanting a support trust into a discretionary trust allows the trustee to make payments at their discretion, shielding the trust assets from the beneficiaries’ debtors. This is a powerful benefit for beneficiaries who may face creditor claims or divorce proceedings.
  • Simplifying administration. A trustee can divide a single trust into two or more trusts or consolidate two or more trusts into a single trust if doing so would be helpful to administration. Trusts can be consolidated even if they were created by different documents or by different grantors.
  • Addressing changed family circumstances. A beneficiary may develop special needs, face addiction issues, or experience a divorce. Decanting can update trust terms to better protect that person.

It is worth noting that tax implications always deserve careful attention. Before any decanting is completed, a thorough tax analysis should be conducted. Just because a decanting is permitted under Georgia state law does not mean it is free from federal tax consequences. Our team at Slowik Estate Planning works with clients to consider all angles before moving forward. We also assist with asset protection planning as part of a broader estate planning strategy.

Trust Decanting vs. Other Methods of Modifying an Irrevocable Trust in Georgia

Decanting is not the only way to modify an irrevocable trust in Georgia. But it is often the most practical. Understanding your options helps you make the right choice for your situation.

Under O.C.G.A. § 53-12-61, there are several other paths for modifying or terminating an irrevocable trust. The trust instrument may confer upon a trustee or other person a power to modify or terminate the trust without court approval. During the settlor’s lifetime, the court shall approve a petition to modify or terminate an irrevocable trust, even if the modification is inconsistent with a material purpose of the trust, if the settlor and all qualified beneficiaries consent.

Judicial modification is another route, but it requires going to court. Judicial modification of noncharitable irrevocable trusts is permitted in the following situations: with consent of the settlor and all beneficiaries even if inconsistent with a material purpose of the trust; with the consent of all beneficiaries after the settlor’s death if the modification is not inconsistent with a material purpose of the trust; and with judicial discretion to facilitate the efficient administration of the trust.

Non-judicial settlement agreements are also available in some situations. A modification by non-judicial settlement agreement is not valid if it would be a modification that requires the settlor’s consent.

So why choose decanting over these other methods? Because the other modification and termination procedures of O.C.G.A. § 53-12-61 require court approval or consent, it may be simpler to just decant an old trust into a new one without going to court. Decanting can be faster, less expensive, and less disruptive than litigation. The trustee can act independently in many cases, as long as the proper notice requirements are met.

That said, the right choice depends entirely on your specific trust document, your family situation, and your goals. An Atlanta estate planning lawyer at Slowik Estate Planning can review your trust and help you identify the most efficient path forward.

How Slowik Estate Planning Can Help With Trust Decanting in Atlanta

Trust decanting is not a do-it-yourself project. It requires a careful review of the original trust document, an understanding of Georgia law under O.C.G.A. § 53-12-62, and a clear plan for drafting the second trust. Getting any step wrong can create legal problems or unintended tax consequences for your family.

At Slowik Estate Planning, located in Atlanta, Georgia, we work directly with individuals and families who need to update their estate plans. We review existing trusts, identify whether decanting is available, and guide trustees through the entire process. That includes drafting the required written notice, preparing the second trust document, and making sure every step meets Georgia’s legal requirements.

We also look at the bigger picture. A trust does not exist in isolation. It connects to your overall estate plan, your tax strategy, and your family’s long-term goals. We consider all of those factors when advising clients on trust decanting. For example, if a trust holds assets for a beneficiary with special needs, or even includes provisions for pet guardianships, decanting may offer a way to update those terms to reflect current circumstances.

It is also important to understand that decanting can have federal income tax and gift tax implications. Just because you can do something under state law does not mean you are immune from negative tax consequences. Before any planning made possible by the decanting statute is undertaken, a tax analysis should be conducted to make sure either negative tax consequences do not result, or any negative tax consequences are deemed acceptable to achieve the desired benefit.

Every situation is different. Results in any one case depend on the specific facts and circumstances involved, and prior outcomes do not guarantee similar results in future matters. What we can promise is that we will give your situation the careful, personalized attention it deserves. Contact Slowik Estate Planning in Atlanta, Georgia today to schedule a consultation and find out whether trust decanting is the right option for your family.

FAQs About Trust Decanting in Atlanta, Georgia

Can any trust be decanted in Georgia?

Not every trust qualifies for decanting under Georgia law. The trustee must have the authority to invade the principal of the original trust. Additionally, under O.C.G.A. § 53-12-62(r), charitable trusts that exist solely for charitable purposes cannot be decanted. The original trust also cannot be extended beyond the applicable rule against perpetuities period through the decanting process. A review of your specific trust document is the only way to know for certain whether decanting is available.

Does the trustee need court approval to decant a trust in Georgia?

In many cases, no. Under O.C.G.A. § 53-12-62, a trustee can decant a trust without court approval or the consent of beneficiaries, as long as the trustee provides proper written notice at least 30 days before the proposed distribution. The notice must describe how the trustee intends to exercise the power and the date of the proposed distribution. However, court approval may be sought voluntarily or may be required in certain circumstances, depending on the terms of the original trust.

Can decanting be used to add new beneficiaries to a trust?

No. Georgia law is clear on this point. The second trust created through decanting cannot include any current beneficiary who was not already a current beneficiary of the original trust, and it cannot include any beneficiary who was not a beneficiary of the original trust. However, the second trust may include a power of appointment that a beneficiary could exercise to benefit persons who were not beneficiaries of the original trust.

What are the tax implications of decanting a trust in Georgia?

Decanting can have significant federal income tax, gift tax, and estate tax implications. For example, IRS Revenue Ruling 2023-2 addressed basis adjustments under IRC § 1014 for assets held in irrevocable grantor trusts, and similar tax considerations can arise when trust assets are moved from one trust to another. Georgia law permits the decanting, but it does not shield you from federal tax consequences. A full tax analysis should always be completed before proceeding with a decanting. Slowik Estate Planning works with clients to identify and address these considerations as part of the planning process.

How do I know if trust decanting is the right option for my situation?

The best way to know is to speak with a qualified estate planning attorney who can review your specific trust document and circumstances. Decanting is one of several tools available under Georgia law to modify an irrevocable trust, and it is not always the right fit. Other options include judicial modification under O.C.G.A. § 53-12-61 or a non-judicial settlement agreement. At Slowik Estate Planning in Atlanta, Georgia, we review your trust, explain your options clearly, and help you choose the path that makes the most sense for your family and your goals.

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