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Historically speaking, one of the cornerstones of an irrevocable trust has been that it was, in fact, irrevocable. However, recent changes to estate laws in several states now allow trustees to decant a trust and change the terms for the benefit of one or more beneficiaries. Decanting a trust is most likely a phrase you’ve never heard before which makes sense considering this is a relatively new process. Within the last five years, 13 states have modified existing estate laws to permit changes to established trusts. This brings the total number of states that allow decanting of trusts to 25. Each state has its own variations on what types of changes are allowed. The following states have some form of decanting trust statutes:
Legislation permitting decanting is driven by many different factors. In some cases, the terms of a trust may no longer be practical. If the terms of a trust are so narrow that the benefit to the beneficiaries is significantly compromised, the trustee may be able to argue for decanting in a state that allows such a change. In some situations, a trust may be established in a rushed manner without giving enough consideration to the long-term effects of the terms. Decanting that trust into a new, more favorable trust may prevent unintended consequences that could have resulted from the previous trust.
Typically, the trustee is the one required to initiate the decanting and must notify the beneficiaries of the potential changes and implications. However, this varies by state with some requiring a waiting period to allow the beneficiaries time to respond and others allowing the trustee to decant without providing notice. It is important to research each state’s specific laws and evaluate the specific goals you’re trying to achieve through decanting.
If you have questions about your options and wish to learn more about how decanting trusts can benefit your specific situation, our experienced estate planning attorneys provide the legal resources and advice you need to make the best decisions for your future. At Altman & Associates, our highly skilled estate planning attorneys are here to provide the legal guidance you deserve. To schedule a consultation, call (301) 468-3220 or send an email today. We have offices in Rockville, Columbia, D.C. and Northern Virginia.