Decanting Your Irrevocable Trust – Two Issues
May 23, 2012 By Hammond Law Group, LLC
An irrevocable trust by its nature is not one that is easily changed, which is why it's referred to as “irrevocable.” However, there are some situations in which a trustee can take action that will for all intents and purposes, change the terms of an irrevocable trust. This is known as decanting, and it involves transferring the trust property from one trust to another.
Because the new trust will have different terms than the original, the trustee essentially changes the terms of the irrevocable trust. While decanting is useful, it is not always easy to do or appropriate. Here are two key issues you need to know about decanting and when it can be used.
Issue 1: Individual Authority or Judicial Approval
In general, a trustee can use decanting at his or her own discretion as long as the trust is located in a state with a decanting law. If there is no such law, the trustee will probably have to go before a judge and ask permission to make the transfer.
Issue 2: Estate Administration Situations
The trustee can use decanting if he or she is doing so for the purposes of aiding the beneficiaries. There are any number of situations in which decanting may be used successfully. For example, a trustee might transfer trust property to a new trust located in a different state in order to take advantage of better tax laws. Also, a trustee may use decanting if a beneficiary is suddenly disabled and needs to apply for specific government programs that he or she would otherwise not qualify for if the trust remained the same.
ABOUT THE AUTHOR: Catherine Hammond
Experienced estate planning attorneys Colorado Springs CO of the Hammond Law Group LLC offers estate planning and business planning resources to residents of Colorado Springs CO.
Copyright Hammond Law Group, LLC
More information about Hammond Law Group, LLC
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
Issue 1: Individual Authority or Judicial Approval
In general, a trustee can use decanting at his or her own discretion as long as the trust is located in a state with a decanting law. If there is no such law, the trustee will probably have to go before a judge and ask permission to make the transfer.
Issue 2: Estate Administration Situations
The trustee can use decanting if he or she is doing so for the purposes of aiding the beneficiaries. There are any number of situations in which decanting may be used successfully. For example, a trustee might transfer trust property to a new trust located in a different state in order to take advantage of better tax laws. Also, a trustee may use decanting if a beneficiary is suddenly disabled and needs to apply for specific government programs that he or she would otherwise not qualify for if the trust remained the same.
ABOUT THE AUTHOR: Catherine Hammond
Experienced estate planning attorneys Colorado Springs CO of the Hammond Law Group LLC offers estate planning and business planning resources to residents of Colorado Springs CO.
Copyright Hammond Law Group, LLC
More information about Hammond Law Group, LLC
View all articles published by Hammond Law Group, LLC
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
