What is a decanting agreement?

Beyond correcting scrivener’s errors, resolving ambiguities, or clarifying trust language, decanting allows trustees to change some provisions of an irrevocable trust by pouring the assets into a new trust with modified terms. As long as the trustee proceeds with care, trust decanting can be a powerful tool.

What does decanting mean in a trust?

Similar to wine decanting, trust decanting is a method by which a trustee may remove or modify trust provisions from an irrevocable trust by pouring — or distributing — the trust assets from an old trust into a new trust. Only certain trusts may be decanted.

What is a decanting power?

One powerful tool for modifying a trust, however, is the concept of decanting, a process by which the trustee of the obsolete or deficient trust distributes the assets of that trust to a second trust in accordance with a decanting agreement that operates to modernize or cure the deficiencies of the first trust.

What is decanting in estate planning?

What is Decanting? Decanting is an option that moves assets from an original trust to a new trust. When the assets are “poured” or “decanted” into the new trust, new terms are created to accommodate changed or changing circumstances for trustees and beneficiaries.

Which states allow trust Decanting?

Alabama, California and Georgia Alabama and California both adopted the Uniform Trust Decanting Act. The question that one must always ask is whether uniformity is good or bad.

How do I decant a trust?

By simply distributing the assets of the old trust to a pre-existing trust with more favorable terms. The power to decant a trust can be provided by the trust terms or authorized by trust law. Currently, about 25 jurisdictions allow for decanting a trust.

What happens when a trust is contested?

If you challenge a trust on the basis of fraud, duress, lack of mental capacity, undue influence and you do not have probable cause, the chances are that you may lose your right to receive benefits from the trust, if there is a no-contest clause.

Can you decant a grat?

For example, a GRAT could not be decanted so long as the current beneficiary was the settlor who received a fixed annual payment.

Is California a UTC state?

Adoption by the States As of the date of this post, 31 states and the District of Columbia have enacted a version of the Uniform Trust Code. There are many similarities between the UTC and the comprehensive trust statutes in California, Georgia, Indiana, Texas, and Washington.