Trusts to Manage Assets During Incapacity

No one plans to become incapacitated. But illness, injury, or cognitive decline can happen to anyone, at any age. When that happens, who manages your bank accounts, pays your bills, and takes care of your property? If you don’t have the right plan in place, a Georgia court may decide that for you. That’s where trusts come in. At Slowik Estate Planning in Atlanta, Georgia, we help individuals and families set up trusts that protect their assets and keep their wishes in control, even when they can’t speak for themselves.

Table of Contents

• What Is Incapacity and Why Does It Matter for Your Estate Plan?
• How a Revocable Living Trust Protects You During Incapacity
• Choosing the Right Trustee for Incapacity Planning
• Irrevocable Trusts and Incapacity: What You Should Know
• Funding Your Trust: The Step Most People Miss
• FAQs About Trusts to Manage Assets During Incapacity

What Is Incapacity and Why Does It Matter for Your Estate Plan?

Incapacity means you can no longer manage your own financial or personal affairs. It can result from a stroke, a serious accident, dementia, or any number of medical conditions. It doesn’t have to be permanent. Even a temporary period of incapacity can leave your finances in a vulnerable state if you haven’t planned ahead.

Without a proper plan, your loved ones may have to go to court to get authority over your assets. Under Georgia law, Title 29 of the Official Code of Georgia Annotated (O.C.G.A.) governs guardianship and conservatorship proceedings. A conservatorship requires a court to appoint someone to manage your financial affairs. That process takes time, costs money, and becomes a matter of public record. It can also cause family conflict when relatives disagree about who should be in charge.

A trust gives you a private, efficient way to handle incapacity on your own terms. You decide in advance who manages your assets, how they manage them, and for whose benefit. You put those instructions in writing, inside a legal document, before anything goes wrong. When incapacity does occur, your named trustee steps in right away, without any court involvement. That means your mortgage gets paid, your medical bills get handled, and your family doesn’t have to scramble.

Think about what happens if you have a sudden stroke tomorrow. Do your loved ones know where your accounts are? Do they have legal authority to access them? Without a trust or other incapacity planning tool, the answer is probably no. That’s a problem Slowik Estate Planning can help you solve today. Contact us to schedule a consultation and start building a plan that actually works when you need it most.

How a Revocable Living Trust Protects You During Incapacity

A revocable living trust is one of the most effective tools for managing assets during incapacity. You create the trust, transfer your assets into it, and serve as your own trustee while you’re healthy. You keep full control. You can buy, sell, and change assets inside the trust without restriction. If you become incapacitated, your pre-named successor trustee steps in and takes over, without any court order required.

Georgia trusts are governed by the Revised Georgia Trust Code of 2010, found in O.C.G.A. Title 53, Chapter 12. Under Article 13 of that chapter, which covers the administration of trusts, a trustee holds broad authority to manage trust property. This includes the power to sell or exchange assets, pay expenses, manage investments, and make distributions to beneficiaries, all without needing a judge’s permission. That authority transfers directly to your successor trustee when you can no longer act.

Your trust document can define exactly what “incapacity” means and how it gets determined. Many Georgia trust documents require certification from two licensed physicians, or a court order, before the successor trustee takes over. This protects you from a premature transfer of control while also making the transition clear and objective when the time comes.

One important thing to understand: a revocable living trust does not protect assets from your creditors during your lifetime. Because you maintain control, Georgia law treats those assets as still belonging to you. But the trust does protect your family from the chaos of court proceedings during a health crisis. It also keeps your financial affairs private, since trust documents don’t become public record the way court proceedings do. To learn more about how wills and trusts compare for incapacity planning, Slowik Estate Planning is ready to walk you through the differences.

Choosing the Right Trustee for Incapacity Planning

Your trustee is the person who will manage your assets when you can’t. That’s not a small responsibility. Choosing the right person, or institution, matters more than almost any other decision in your trust plan. A bad choice can lead to mismanagement, family conflict, or even financial harm.

Under O.C.G.A. § 53-12-200 through § 53-12-221 (Article 11 of the Revised Georgia Trust Code), trustees have significant legal duties. They must act in the best interest of the trust’s beneficiaries, manage assets prudently, keep accurate records, and avoid conflicts of interest. Georgia’s trust investment standards, found in Article 16 (§§ 53-12-340 through 53-12-364), require trustees to follow the Prudent Investor Act when managing trust assets. That means making reasonable investment decisions based on the overall trust portfolio, not just individual assets in isolation.

So who should you name? Many people choose a trusted adult child, sibling, or close friend as their successor trustee. That works well when the person is financially responsible, organized, and capable of handling the job. For more complex estates, or when family dynamics are complicated, a professional corporate trustee, such as a bank trust department, may be a better fit. Corporate trustees bring experience and objectivity, but they also charge fees.

You can also name co-trustees, where two people must act together, or name a series of successor trustees in order of priority. Under O.C.G.A. § 53-12-261, a trustee of an express trust has broad authority to act without court approval, which means your chosen trustee can move quickly when needed. That speed matters during a health crisis. Slowik Estate Planning helps clients think through these choices carefully, so the right person is in the right role when it counts. Reach out to our Atlanta office to discuss your options.

Irrevocable Trusts and Incapacity: What You Should Know

Revocable trusts get most of the attention in incapacity planning, but irrevocable trusts also play an important role in some situations. Once you create an irrevocable trust, you generally give up control over the assets you place inside it. That’s a significant trade-off. But in the right circumstances, it can offer protections that a revocable trust cannot.

For example, if you’re concerned about long-term care costs and want to preserve assets for your family, certain irrevocable trusts can be structured to help with Medicaid planning. A revocable living trust won’t help with Medicaid eligibility because you still control the assets. With an irrevocable trust, properly structured and funded well in advance, those assets may no longer count as available resources for Medicaid purposes. This is a complex area of law, and the rules around Medicaid look-back periods and asset transfers require careful planning.

There’s also an important tax consideration. Under IRS Revenue Ruling 2023-2, assets held in an irrevocable trust that are not included in your gross estate for federal estate tax purposes do not receive a stepped-up basis at your death. That means the trust assets carry over their original cost basis rather than being reset to fair market value at the date of death. This is a critical planning point that affects the income tax consequences for your beneficiaries when they eventually sell those assets. It’s one reason why choosing between a revocable and irrevocable trust requires a careful analysis of your full financial picture.

Irrevocable trusts are also used for special needs planning, asset protection for trust beneficiaries, and even for pet guardianships. At Slowik Estate Planning, we help you understand which type of trust fits your goals before you commit to any structure.

Funding Your Trust: The Step Most People Miss

Creating a trust document is only half the job. The other half is funding it. A trust can only manage assets that are actually inside it. If you set up a revocable living trust but never transfer your bank accounts, real estate, or investment accounts into the trust’s name, the trust is essentially an empty shell. It can’t protect you during incapacity if it doesn’t own anything.

Funding a trust means retitling assets. For real estate, that means recording a new deed that transfers ownership from your name to the trust. For bank accounts and investment accounts, it means updating the account title with your financial institution. For other assets, it may mean executing a formal assignment of property. Under O.C.G.A. § 53-12-261, a trustee has broad authority to manage trust property, but only property that has actually been transferred into the trust. Assets left outside the trust may still require probate or court involvement if you become incapacitated.

Georgia also has the Revised Uniform Fiduciary Access to Digital Assets Act, found in O.C.G.A. Title 53, Chapter 13. This law gives your trustee the ability to access and manage digital assets, such as online bank accounts, investment platforms, and digital files, when acting in a fiduciary capacity. That’s increasingly important as more financial activity moves online. Your trust plan should address digital assets specifically.

Many people also coordinate their trust with a durable power of attorney, which is governed by O.C.G.A. Title 10, Chapter 6B (the Georgia Power of Attorney Act). A durable power of attorney can authorize your agent to transfer assets into your trust even after you’ve become incapacitated, which helps plug gaps in trust funding. Proper trust administration depends on getting the funding right from the start. Slowik Estate Planning works with clients throughout Atlanta and the surrounding area to make sure their trusts are properly funded and ready to work when needed. As an Atlanta estate planning lawyer, Slowik Estate Planning is committed to helping you build a complete, practical plan that protects you and your family. Contact us today to get started.

FAQs About Trusts to Manage Assets During Incapacity

Does a will protect my assets if I become incapacitated in Georgia?

No. A will only takes effect after you die. It has no power during your lifetime, including during a period of incapacity. If you become incapacitated without a trust or durable power of attorney in place, your family may need to go through a court-supervised conservatorship proceeding under O.C.G.A. Title 29 to get authority to manage your finances. A properly funded revocable living trust avoids that process entirely by giving your successor trustee immediate authority to act on your behalf.

What happens to my trust if I recover from incapacity?

If your incapacity is temporary and you recover, you can resume your role as trustee of your own revocable living trust. Your trust document should include provisions that address how and when you can resume control. Most trust documents require a physician’s certification that you have regained capacity before the successor trustee steps aside. This protects both you and your trustee by making the transition clear and objective. Slowik Estate Planning drafts trust documents with these details carefully addressed.

Can I name a bank or financial institution as my successor trustee in Georgia?

Yes. Georgia law allows you to name a corporate trustee, such as a bank trust department or a licensed trust company, to serve as your successor trustee. Corporate trustees bring professional asset management experience and are subject to regulatory oversight. They are a good option for larger or more complex estates, or when family relationships make a personal trustee impractical. The trade-off is that corporate trustees charge fees for their services. Slowik Estate Planning can help you weigh the pros and cons based on your specific situation.

Does putting assets in a trust affect my taxes?

For a revocable living trust, the tax impact during your lifetime is minimal. The IRS treats a revocable trust as a “grantor trust,” meaning all income is still reported on your personal tax return. There is no separate trust tax return required while you are alive and in control. However, for irrevocable trusts, the tax picture is more complex. Under IRS Revenue Ruling 2023-2, assets in an irrevocable trust that are not included in your gross estate do not receive a stepped-up cost basis at your death, which can have significant income tax consequences for your beneficiaries. Consulting with Slowik Estate Planning before creating an irrevocable trust is essential.

How often should I review my trust to make sure it still works for incapacity planning?

You should review your trust any time there is a major life change, such as a marriage, divorce, birth of a child, death of a named trustee or beneficiary, or a significant change in your assets or financial situation. Even without major life events, a review every three to five years is a good practice. Laws change, your assets change, and your family circumstances change. A trust that was perfectly drafted years ago may no longer reflect your wishes or work as intended under current law. Slowik Estate Planning offers trust reviews to make sure your plan stays current and effective.

More Resources About Incapacity and Conservatorship Avoidance

• Supported Decision Making Concepts
• Coordinating Trusts With Powers of Attorney and Health Directives