Legal Blog

The Weekly Scenario from Steve Shane – 5.28.13

Question:  My children are beneficiaries of one irrevocable trust set up years ago by my great aunt.  My brother is the Trustee.  Some of the trust provisions seem ill-conceived and my brother would like to amend the trust to permit each child’s share to be administered as a separate trust?  Can this be done? Answer:  It is possible that the Trustee may find relief in what is known as a decanting statute if the resident state has passed such legislation. Many states have passed these “decanting” statutes which allow for flexibility in irrevocable trusts by permitting Trustees to distribute trust assets from one trust to another.  These statutes generally allow Trustees to ‘decant’ the trust assets into a new trust without the consent of the Settlor, the court, or the trust beneficiaries, so long as proper notice is given to all the beneficiaries who don’t object. [side bar – I tend to think of decanting a trust like the decanting of wine where you pour wine from one container to another (adding the “good” and discarding the “bad”)] Decanting is a very useful tool for Trustees, particularly when the trust is an older instrument perhaps with antiquated language.   For example, the Trustee may choose to decant the trust to address a beneficiary’s change of circumstances, the division of a single common trust into separate trusts for each branch of the family, or responding to changes in federal or state tax law. Or, simply decanting may correct ambiguities in the trust instrument itself.  The benefit of decanting is to allow a Trustee to change specific trust provisions without court intervention which makes it a less costly and more expedient process. To address your specific circumstances, we would need to know the state law which applies to determine whether the particular state has decanting statutes.  If not, it is possible that we could change the situs of the trust.  If these options don’t pan out, it is still possible to obtain the relief requested through other means such as court involvement. Comment:  Virginia is one of the states that have more recently passed a decanting statute (2012).  A growing number of states have also passed decanting statutes.  Maryland has no such statute and one doesn’t appear to be too close on the horizon. Steven E. Shane Principal Offit│Kurman Attorneys At Law 301.575.0313 Washington 443.738.1513 Baltimore 410.218.9339 Mobile 301.575.0335 Facsimile Please note the above material discussed is intended to provide only general information. Do not, under any circumstances, solely rely on this information as legal advice. Legal matters are often complicated. For assistance with your specific legal problem or inquiry please contact me directly.