Description
2.0 TOTAL CREDITS: 1.0 professional practice; 1.0 skills
Trust decanting, or the exercise by a trustee of the power to distribute principal to the beneficiaries by distributing some or all of the trust property to a new trust established by the trustee, has become a powerful tool for modifying otherwise indestructible trusts to better carry out the settlor’s intent, provide for the changed needs of the beneficiaries, or take advantage of changes in the tax laws.
In 1992, New York was the first state to enact a statute (EPTL 10-6.6(b) et seq.) creating a framework for the exercise of a trustee’s power to appoint trust property in favor of another trust. With amendments in 2011 and 2013, the statute now provides a clear road map for using the power to decant to achieve a wide variety of modifications to irrevocable trusts.
Decanting is a flexible, cost-effective, and straightforward tool for making trusts work better, and practitioners should be aware of how to use it.