Focused And Personalized Attention
Concerning Your Estate Planning Needs

What does it mean to decant a trust?

On Behalf of | May 31, 2024 | Estate Planning |

Irrevocable trusts are an effective way of preserving wealth for subsequent generations – but what happens when the terms of a trust seem wildly outdated or no longer meet the needs of those it is supposed to benefit?

That’s when it may be possible to “decant” the trust. Simply put, decanting a trust refers to the process of distributing the assets from one trust into a new or existing trust with different provisions – much like pouring wine from one bottle to another to improve its flavor.

Why should you consider decanting a trust?

It’s important to note that not all trusts can be decanted, although California does permit decanting in certain situations. Some good reasons to consider this option include:

  • Adjusting to changing circumstances for beneficiaries: Perhaps you set up a trust for your children’s college, but you never considered the possibility that your youngest child might develop debilitating health problems that would prevent them from pursuing a higher education.
  • Adjustments related to tax and investment strategies: Decanting can be used to take advantage of or respond to changes in tax laws or to make use of more flexible investment strategies that weren’t available or weren’t properly considered before the trust’s creation.
  • A desire to mitigate risk for the trust or beneficiaries: Decanting can allow you to move assets to a trust with better safeguards against creditors or other financial risks, or it can be used to add additional provisions that will protect beneficiaries with problems like substance abuse from themselves.
  • Addressing ambiguities and mistakes: Mistakes happen, and ambiguities in a trust’s documents can create serious problems in the future, but decanting can help fix unintentional oversights and unclear language.

Decanting a trust is a technique that can be very useful for addressing changing needs and unforeseen circumstances – but it is something that should only be explored with the appropriate legal guidance.

Let’s Do This Together.

FindLaw Network