Friday, August 1, 2014
One of the hottest issues in modern trust law is decanting. The term “decanting” sounds mysterious, but in reality, decanting is simply a form of trust modification initiated by a trustee.
The trustee accomplishes the modification by moving assets from one trust to a new trust with different terms. Estate planning attorneys draft trusts designed to last for generations based on assumptions about the beneficiaries which may bear no semblance to reality. Decanting then stems from the desire to make changes to an otherwise irrevocable trust. Decanting occurs when a trustee, exercising discretionary authority to distribute trust property to or for the benefit of trust beneficiaries, distributes assets from one trust to another.
This article provides a “short course” on decanting by covering:
• Decanting’s historical background,
• Reasons to decant,
• Decanting’s interface with fiduciary duties, and
• State decanting statutes.
See Gerry W. Beyer & Melissa J. Willms, Decanting is Not Just for Sommeliers, Estate Planning Studies (July 2014).