Decanting, appropriately referred to as a “do over,” is essentially distributing assets from an irrevocable trust to a new trust with different, and presumably more desirable and flexible terms, leaving the unwanted terms in the original trust and not binding on the assets.
Many states do not have a decanting statute and not all states have equal decanting statutes..
Common Reasons for Decanting
Change the administrative terms of the trust to ensure the trust provides the proper tools to its fiduciaries for the best management of the trust:
- Improve the trust’s governance structure
- Improve tax provisions
- Save state income taxes
- Add flexibility regarding appointment of trustees and other fiduciaries
- Add a Trust Protector
- Change the governing law applicable to the trust
- Change the distribution provisions of the trust
- Modernize an outdated trust agreement