If you are interested in a trust as an estate planning tool, you may have heard the word “decanting” and wondered what it means and why you might need it as a strategy.
What does decanting mean?
- The word “decanting” traces its roots to winery, where a person would decant a wine by pouring it from it’s bottle into another container.
- Similarly, a 2019 California law allows you to change the terms of an irrevocable trust by “pouring” trust assets from an old trust instrument into a new trust.
- This helps you to leave behind the unwanted terms of the old trust, just as you would leave behind the impurities in the wine.
What law changed the rules for trust decanting?
- The California Uniform Trust Decanting Act became effective January 1, 2019.
- Before this change, modifying an irrevocable trust was difficult, but now decanting provides an easier way to modify an irrevocable trust.
How is decanting accomplished?
- In general, you must still notify trust beneficiaries of the proposed changes and allow them the opportunity to object to the changes.
- You must also stay within the limits of which the trust terms can be changed, which depend on the Trustee’s authority in the original trust.
- For example, you might want to eliminate beneficiaries, but you wouldn’t be allowed to use this rule to increase Trustee compensation.
Contact an Experienced Estate Planning Attorney
There are pros and cons to decanting, and it needs to be accomplished properly. At the Law Office of David Knecht, we make it our business to stay current on regulatory changes that impact estate planning. We will customize a plan to help you find creative solutions to meet your estate planning goals, and we will work with you to keep your plan up-to-date and responsive to regulatory changes. Contact us today at 707-451-4502.
