Trust Planning for Concentrated Stock

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If you own a large block of stock in a single company, you already know the feeling. The value has grown significantly over the years, and selling it all at once would trigger a massive tax bill. So what do you do? For many Atlanta families and business owners, the answer is trust planning for concentrated stock. At Slowik Estate Planning, located in Atlanta, Georgia, we help clients think through the right trust strategies to protect their wealth, reduce taxes, and pass assets on to the next generation in a smart, structured way. This page walks you through how concentrated stock trust planning works, what Georgia law says about it, and why acting now matters more than ever.

Table of Contents

What Is Concentrated Stock and Why Does It Create a Problem?

Concentrated stock simply means you own a large amount of stock in a single company. This often happens when you’ve worked for a company for many years and received stock options or restricted stock units as part of your pay. It also happens when a family business goes public, when an inheritance includes a big stock position, or when an early investment in one company grew far beyond anything else in your portfolio.

The problem is that when a large percentage of a portfolio is invested in one stock, performance becomes heavily dependent on the fortunes of that single company. Think about what that means in real terms. If that company hits a rough patch, faces a lawsuit, or loses a key leader, your entire financial picture could change overnight. And yet, selling a large, appreciated stock position can result in substantial capital gains taxes, often deterring investors from diversifying.

Here is where it gets even more difficult. Selling a large highly appreciated stock position outright can result in significant capital gains taxes and potentially expose the investor to the additional 3.8% Net Investment Income Tax (NIIT). That combination of federal long-term capital gains tax and the NIIT can take a real bite out of your wealth. While the immediate cost of selling may seem prohibitive due to high capital gains taxes, the cost of inaction can be even greater. Holding onto concentrated positions increases exposure to market volatility and company-specific risks, potentially leading to financial losses that far outweigh the tax liability.

This is exactly why trust planning is so valuable. A well-designed trust can help you reduce the tax hit, protect the asset, and keep your estate plan on track. Whether you need a basic trust structure or something more advanced, working with an Atlanta estate planning lawyer at Slowik Estate Planning gives you access to real, Georgia-focused legal guidance tailored to your situation.

How Georgia Trust Law Applies to Concentrated Stock

Georgia’s trust laws give you real options when it comes to holding and managing concentrated stock inside a trust. The Revised Georgia Trust Code, found under O.C.G.A. Title 53, Chapter 12, sets the rules for how trusts are created, managed, and administered in this state. Understanding a few key provisions helps you see why trust planning for concentrated stock is both practical and legally sound in Georgia.

One of the most important rules for trustees is found at O.C.G.A. § 53-12-341. A trustee shall reasonably manage the risk of concentrated holdings of assets in a trust by diversifying or by using other appropriate mechanisms. This means that if you transfer concentrated stock into a trust, the trustee has a legal duty to think about diversification. However, the law also gives you flexibility. The duty does not apply if the trustee reasonably determines that the purposes of the trust are better served without diversifying, and the trustee is not liable if the trust instrument itself limits or waives that duty. So if you want the trust to hold the stock long-term, you can draft the trust document to allow that.

Georgia law also allows for modification of irrevocable trusts under certain conditions. Under O.C.G.A. § 53-12-61, a court may modify an irrevocable trust if all qualified beneficiaries consent, the trustee has received notice of the proposed modification, and the court concludes that modification is not inconsistent with any material purpose of such trust. This matters because your circumstances may change after you set up a trust. Georgia law gives you a path to adjust the plan without starting over from scratch.

Additionally, Georgia trusts can now last up to 360 years, which makes dynasty-style trust planning a real option for Atlanta families with significant stock holdings. You can also look into trust administration services to make sure an existing trust is being managed correctly under Georgia law. Proper administration is just as important as proper drafting, especially when concentrated stock is involved.

Trust Strategies That Work for Concentrated Stock

There is no single trust strategy that works for everyone. The right approach depends on your goals, your tax situation, and whether you want to keep the stock, sell it, or eventually give some of it away. Here are the main trust structures that Atlanta families use to manage concentrated stock effectively.

A Grantor Retained Annuity Trust, or GRAT, allows you to transfer appreciated stock to an irrevocable trust and receive fixed annuity payments back over a set term. If the stock grows faster than the IRS hurdle rate during that period, the excess growth passes to your heirs free of gift tax. This can be a powerful tool when stock values are expected to rise.

An Irrevocable Grantor Trust, sometimes called a Defective Grantor Trust, is another option. You transfer the stock to the trust as a completed gift for gift tax purposes, but you remain the owner for income tax purposes. This means you pay the income taxes on trust earnings personally, which effectively makes a tax-free gift to your beneficiaries each year. However, there is an important tax issue to understand here. Under IRS Revenue Ruling 2023-2, when assets are held in an irrevocable grantor trust and those assets are not included in your gross estate at death, the assets do not receive a stepped-up basis under Internal Revenue Code Section 1014. In other words, the trust beneficiaries inherit the original cost basis, not the fair market value at your death. This is a critical planning consideration when your stock has a very low basis.

A Charitable Remainder Trust, or CRT, is a popular option for those who want to diversify without paying immediate capital gains taxes and also want to support a cause they care about. A charitable remainder trust can potentially allow you to defer the realization of capital gains on a concentrated position. Appreciated stock that is contributed to a CRT can be sold and diversified into a new portfolio without the donor being required to realize an immediate capital gains tax liability. The donor can then receive annual payments over the term of the trust. When the term of the trust ends, the assets remaining in the trust would be distributed to one or more charities selected in advance by the donor. This combines income planning with charitable giving in a tax-smart way. You can also explore how wills and trusts work together to round out your overall estate plan.

The Basis Step-Up Issue and Why It Matters in 2026

One of the biggest decisions in concentrated stock trust planning is whether your heirs will receive a stepped-up basis at your death. This matters because a stepped-up basis can eliminate capital gains taxes on years of appreciation. Under Internal Revenue Code Section 1014(a)(1), the basis of property acquired from a decedent is generally the fair market value of that property at the date of death. That means if your heirs inherit stock worth $5 million that you paid $200,000 for, they can sell it immediately and owe no capital gains tax on that $4.8 million of growth.

However, not all trusts preserve this benefit. IRS Revenue Ruling 2023-2 made clear that assets held in an irrevocable grantor trust, where the assets are not included in the grantor’s gross estate for estate tax purposes, do not receive a basis adjustment under Section 1014 at death. The ruling states that if a grantor funds an irrevocable trust with an asset in a transaction that is a completed gift for gift tax purposes, the basis of that asset is not adjusted to its fair market value on the date of the grantor’s death. The basis immediately after death remains the same as the basis immediately before death.

This means the trust structure you choose has real consequences for your trust beneficiaries. If a stepped-up basis is important to your plan, you may need a different structure than an irrevocable grantor trust. In some instances, heirs receive significant stock holdings as part of an estate, particularly if the decedent avoided selling highly appreciated positions to benefit from the cost basis step-up at death. In other cases, heirs inherit highly appreciated stock positions in a trust or other legal structure that does not receive a step-up in basis, so they continue to hold the position to avoid capital gains taxes. Getting this right requires careful planning before you act.

It is also worth noting that in the 2026 tax year, the top marginal tax rate for a single filer, 37%, begins after $640,600 of taxable income. A trust is subject to that rate after reaching only $16,000 of taxable income. This compressed tax rate for trusts is one more reason why the structure of your trust matters enormously, especially when concentrated stock generates significant income or gains.

Charitable Giving Strategies Paired With Trust Planning

For many Atlanta families, concentrated stock trust planning and charitable giving go hand in hand. If you have appreciated stock and also want to support a charity, a Charitable Remainder Trust gives you a way to accomplish both goals at once. You contribute the stock to the CRT, the trust sells it without paying capital gains tax, and the proceeds are reinvested in a diversified portfolio. You then receive income from the trust for life or for a set number of years, and the remaining assets go to your chosen charity at the end of the term.

By transferring concentrated stock into a CRT, investors can receive a charitable deduction, avoid immediate capital gains taxes, and receive an income stream from the trust. This is a real win on multiple fronts. You reduce your concentrated position, get a charitable deduction, receive ongoing income, and leave a legacy to an organization you care about.

A Charitable Lead Annuity Trust, or CLAT, works in the opposite direction. The charity receives payments first, and your heirs receive what remains at the end of the trust term. This can be an effective estate tax reduction tool if the stock is expected to grow significantly during the trust term.

You can also simply gift shares of appreciated stock directly to a Donor-Advised Fund. The investor avoids paying capital gains tax on the appreciation, and a charitable deduction is generally available for the full fair market value of the shares donated, up to 30% of the investor’s Adjusted Gross Income, subject to additional limitations. A Donor-Advised Fund also gives you flexibility to decide later which charities receive the money.

If your estate plan includes family members who live outside the United States, or if the stock is in a foreign company, you will also want to think about International Estate Planning as part of your overall strategy. Cross-border trust issues add another layer of planning that requires careful attention. And if your estate plan needs to account for beloved animals, know that Georgia law also supports pet guardianships and pet trusts, so your whole family, including the four-legged members, can be protected.

Why Now Is the Right Time to Plan

If you have been sitting on a concentrated stock position and telling yourself you will deal with it later, 2026 is a good time to reconsider. Tax law changes over time, and the planning tools available today may not always be available in the same form. The federal estate and gift tax exemption, the capital gains rates, and the rules around grantor trusts are all subject to change with new legislation. Waiting means giving up planning options that are available right now.

Georgia law also gives you tools that many other states do not. The Revised Georgia Trust Code allows for flexible trust modification, long-duration trusts, and clear rules around trustee duties for concentrated holdings. Within a reasonable time after accepting a trusteeship or receiving trust assets, a trustee shall review the trust assets and make and implement decisions concerning the retention and disposition of assets in order to bring the trust portfolio into compliance with the purposes, provisions, distribution requirements, and other circumstances of the trust. This means that once a trust is funded with concentrated stock, the trustee has an active duty to review and manage it properly.

Working with Slowik Estate Planning in Atlanta means you get a legal team that understands both the federal tax rules and the specific requirements of Georgia law. We do not take a one-size-fits-all approach. We take the time to understand your stock position, your family situation, your goals, and your tax picture before recommending a strategy. Every plan we create is built around your specific needs.

If you are ready to take action, or if you just want to understand your options, contact Slowik Estate Planning today. Our office is located in Atlanta, Georgia, and we welcome clients from throughout the metro area and beyond. Reach out to us to schedule a consultation and start building a plan that protects what you have worked hard to create.

FAQs About Trust Planning for Concentrated Stock in Atlanta, Georgia

What is a concentrated stock position and when should I start planning?

A concentrated stock position means a large portion of your wealth is tied up in a single company’s stock. You should start planning as soon as you recognize the concentration, because the longer you wait, the more tax exposure you accumulate. Early planning gives you more tools to work with, including trust structures that can defer or reduce capital gains taxes. Slowik Estate Planning can help you review your situation and identify the right strategy for your needs.

Will my heirs get a stepped-up basis if I put my stock in an irrevocable trust?

Not necessarily. Under IRS Revenue Ruling 2023-2, assets held in an irrevocable grantor trust that are not included in your gross estate at death do not receive a stepped-up basis under Internal Revenue Code Section 1014. This means your heirs may inherit your original cost basis, not the fair market value at your death. The answer depends on how the trust is structured, which is why working with an experienced estate planning attorney before you transfer assets is so important.

What does Georgia law say about a trustee’s duty to diversify concentrated stock?

Under O.C.G.A. § 53-12-341, a trustee in Georgia has a legal duty to reasonably manage the risk of concentrated holdings by diversifying or using other appropriate mechanisms. However, this duty can be waived or limited by the terms of the trust document itself. If you want the trustee to hold concentrated stock long-term, your trust must be drafted carefully to allow that. An attorney at Slowik Estate Planning can help you draft trust language that fits your goals while staying within Georgia law.

How does a Charitable Remainder Trust help with concentrated stock?

A Charitable Remainder Trust allows you to transfer appreciated stock to an irrevocable trust. The trust sells the stock without paying immediate capital gains tax, reinvests the proceeds in a diversified portfolio, and then pays you an income stream for life or a set number of years. At the end of the trust term, the remaining assets go to a charity you have chosen. You also receive a charitable deduction when you fund the trust. This approach helps you diversify, generate income, and support a cause you care about, all at the same time.

Can Slowik Estate Planning help me if my stock is in a foreign company?

Yes. If your concentrated stock is in a foreign company, or if you have family members living outside the United States, international estate planning rules add another layer of considerations to your plan. Slowik Estate Planning offers international estate planning services and can help you think through the cross-border issues that affect your trust structure, tax obligations, and beneficiary designations. Contact our Atlanta, Georgia office to discuss your specific situation.

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