Tax Blog

Decanting: It Isn’t Just For Wine, It Can Also Be Used For Your Trust

Calm down wine-o’s, this blog isn’t about you. Over the last decade, numerous states have passed statutes that allow trust decanting. Delaware, Florida, Illinois, Michigan, Nevada, and Texas are just a few of approximately half the states that explicitly allow a trustee to decant a trust.

Trust decanting is the process of distributing trust assets from one trust to a new trust with different terms. It gets its name because it’s similar to the process of decanting wine. The wine (trust assets) is poured out of its original bottle (old trust) and into a new bottle (new trust), leaving the unwanted sediments (undesirable terms) in the original bottle. Generally, the trust can be decanted using the following steps.

First, all beneficiaries of the trust should be notified of the intent to decant the trust. Since it is possible that their interests will be negatively affected, you should ensure service is completed by a process server, certified mail, or another method that your state deems as proper service. Before proceeding to the next step, make sure that you’ve given the beneficiaries proper notice as detailed in your state’s statute.

Next, you will need a decanting instrument and creation of a new trust. The decanting instrument essentially shows that the old trustee and new trustee accept the terms of the decanting. The decanting instrument should also state where the trustee has been given the authority to decant the old trust. Typically, there is a clause in the old trust detailing the trustee’s rights.

Someone may choose to decant a trust for various reasons. Perhaps the term of the trust needs extend, or maybe drafting errors or ambiguous terms need fixed from the old trust. Whatever the reason may be for decanting a trust, the professionals at The Center for Financial, Legal and Tax Planning can help with trust decanting in addition to any other estate planning questions you may have. Please contact us at (618) 997-3436.

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The Center for Financial, Legal & Tax Planning, Inc.

4501 West DeYoung Street | Suite 200 | Marion, IL 62959

Phone: 618-997-3436| Fax: 618-997-8370

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