While things like cheese get better with age, the same cannot be said for some irrevocable trusts. Maybe you’re the beneficiary of trust created by your great grandfather over seventy years ago and that trust no longer makes sense. Or, maybe you created an irrevocable trust over twenty years ago and it no longer makes sense. Wine connoisseurs may ask: Is there any way to fix an irrevocable trust that has turned from a fine wine into vinegar? You may be surprised to learn that under certain circumstances the answer is yes, by “decanting” the old broken trust into a brand new one.

What Does It Mean to “Decant” a Trust?

In the world of irrevocable trusts, “decant” refers to the transfer of some or all of the property held in an existing trust into a brand new trust with different and more favorable terms.

When Does It Make Sense to Decant a Trust?

Decanting a trust makes sense under a myriad of different circumstances, including when you’d like to:

What is the Process for Decanting a Trust?

Decanting must be allowed under applicable state case law or statutory law. Aside from this, the trust agreement may contain specific instructions with regard to when or how a trust may be decanted.

Once it is determined that a trust can and should be decanted, the next step is for the trustee to create the new trust agreement with the desired provisions. The trustee must then transfer some or all of the property from the existing trust into the new trust. Any assets remaining in the existing trust will continue to be administered under its terms; and, an empty trust will be terminated.

WARNING: Decanting is Not the Only Solution to Fix a Broken Trust

While decanting may work under certain circumstances, fortunately, it is not the only way to fix a “broken” irrevocable trust. Our firm can help you evaluate options available to fix your broken trust and determine which method will work the best for your situation. If you have a trust has turned to vinegar and isn’t what you want it to be, call our office now.