Decanting an irrevocable trust is the process of pouring assets from an old, outdated trust into a new trust with more favorable terms. Like decanting wine and leaving unwanted sediment at the bottom of the old bottle of wine, the same can be done with a trust to remove unwanted provisions. To steal a golf term, we call it the “Mulligan” of estate planning.
There are 28 states with a decanting statute, but not all are created equal. If the governing law of a trust is located in a state without a decanting statute, you could transfer the situs of the trust to a jurisdiction with a decanting statute. To see a chart that ranks each state and its decanting statue please visit https://www.oshins.com/state-rankings-charts.
The theory behind decanting an irrevocable trust is that if the trustee has the power to make an outright distribution to a beneficiary, then the trustee should also have the ability to exercise that power to distribute to the beneficiary in further trust (rather than outright).
One of the biggest advantages of decanting under Nevada law is that that the trustee is not required to notify the beneficiaries of its action to decant. Often, the reason for decanting a trust is sensitive to the parties, and therefore privacy is a key factor in choosing a decanting jurisdiction. IconTrust, like most other corporate trustees, may provide notice to the trust beneficiaries depending on the scenario and the goals for the decanting.
IconTrust would become the trustee of the old trust and trustee of the new trust. The trustee is responsible for the act of decanting the assets from the old trust into the new trust utilizing a decanting document. To accomplish the decanting, IconTrust would charge a $1,000 decanting fee.
You will want to make sure to work with a trustee that has experience decanting trusts and knows the mechanics and pitfalls to avoid. Decanting is a hot topic and a powerful planning technique to make changes to a trust while still carrying out the original intent of the creator of the trust.
IconTrust is located in Nevada, one of the best states to decant. To take advantage of Nevada’s preferable laws, you will need a trustee in Nevada. IconTrust can meet that requirement for you.
If you have any questions about decanting, please email firstname.lastname@example.org or call 702-998-3700.