Bill Aimed at Simplifying Process of Amending Irrevocable Trusts Tabled Until Next Year
A series of laws were introduced in the Georgia assembly this year that, if passed, could have a substantial impact on the process of amending Georgia irrevocable trusts. One of these bills, House Bill 121, was tabled for 2017; but it will be reintroduced in the House in 2018, the second year of a two-year legislative cycle. To learn more about how these potential changes could affect your own estate planning strategies, speak with an experienced wills and trusts attorney.
Changing an Irrevocable Trust
Generally, amending an irrevocable trust is a difficult task under Georgia’s current law. An irrevocable trust cannot be amended unless the trust instrument confers to a trustee or other person the power to modify the trust or through a tedious judicial modification process. If HB 121 is passed, it will expand the ways a trust can be modified or terminated and could have significant impact on estate planning. The proposed legislation expands the ways in which an irrevocable trust instrument can be modified or terminated, with or without court approval. According to the terms of HB 121, an irrevocable trust could be modified in the following ways:
- through court-approved modification initiated during the grantor’s lifetime with his or her consent and with the consent of all trust beneficiaries;
- after the grantor’s death, by obtaining court approval for the changes – provided all the beneficiaries consent to the changes and the modification is not inconsistent with the material purpose of the trust in question;
- by court approval, if the trust modifications would facilitate a more efficient trust administration (in the discretion of the court);
- through the process of decanting, in which a trustee distributes property held in the trust to a new trust or trusts; and
- through private, non-judicial settlement, in which all parties consent to certain changes.
A court would also make the following changes, if doing so would aid in the administration of the trust:
- appoint a new trustee;
- modify the trust to achieve the grantor’s tax objectives;
- divide one trust into two or more trusts; or
- merge or consolidate two or more trusts.
In addition to trust modification changes, the proposed legislation would ensure the interests of unborn beneficiaries are represented in the modification process by designating one party to receive notice and give consent on behalf of unborn beneficiaries.
Ultimately, the goal of HB 121 legislation is to simplify the process of modifying irrevocable trusts by allowing them to be amended in private among the interested parties and without court intervention.
Call an Atlanta Wills and Trusts Lawyer Today
Amending an irrevocable trust is challenging; so if you are considering creating this type of trust or are interested in changing your own, please contact one of the experienced Atlanta wills and trusts attorneys at MendenFreiman LLP by calling 770-379-1450. A member of our legal team is standing by to help you.