Decanting is a power allowed under a trust agreement or by state law that permits a trustee to "amend" an irrevocable trust within certain bounds. The "amendment" is effectuated by the Trustee distributing (pouring) assets from the current trust into a new trust with improved terms/language. It is akin to decanting wine by pouring from one container to another and leaving the unwanted residue in the old container. Decanting can accomplish many goals, but there are limitations. For example, decanting cannot be used to add a new beneficiary, to extend the perpetuity period applicable to the trust, or to remove a presently exercisable power of the beneficiary to withdraw trust assets. Decanting is a powerful tool to revamp an irrevocable trust by removing outdated drafting structures, or reallocating beneficial enjoyment among existing beneficiaries.
For more information on decanting or to determine whether decanting can help in your situation, please contact us.