Trust decanting distributes assets from one trust to a new one with improved terms – our team of experienced trust attorneys can explain your options
Trustees are legally obligated to act in the best interests of beneficiaries. In some circumstances, this fiduciary duty might oblige the trustee to decant the trust; if the trust document does not clearly provide for decanting, the trustee must determine whether they have authority to decant the trust. Trust modification via decanting allows assets of an existing trust to pass to a new trust with more favorable terms.
Determining If Decanting Is Your Best Option
Decanting is one of many methods used to modify irrevocable trusts. While it is not permitted in all states, nearly half of the United States have decanting statutes in place. If the trust is in a jurisdiction lacking decanting statutes, the trustee could move the trust to an area that provides for such.
Other methods of modification involve action by a trust protector or a non-judicial settlement agreement. The latter is not available in all states. While the Ferri case highlights how broad powers granted to trustees may authorize and, in certain circumstances, make it their duty to decant the trust, it only analyzed decanting and did not speak to other trust modification methods. It remains to be seen if cases involving other trust modification methods would yield similar analysis by the court.
Before a trustee moves forward with trust modification, many factors should be considered: pending legislation, tax implications, discovery of errors, and life changes affecting beneficiaries, such as the divorce proceedings in the aforementioned case.
Speak to one of our experienced trust decanting attorneys to learn more about your options and to determine if decanting is right for your family.