As estate planners, we seek to maximize flexibility in the plans we craft for our clients. The irrevocable trust traditionally poses an obstacle to a flexible estate plan, rarely allowing for any modification, even in situations of poor drafting or change of circumstance.
This article will discuss “decanting”—a powerful tool that may be available to modify the terms of an irrevocable trust. Currently seven states, New York1, Alaska2, Delaware3, Tennessee4, Florida5, South Dakota6 and, most recently, New Hampshire7 statutorily allow trustees to decant a trust. A decanting statute allows the trustee of a trust to transfer all or part of the original trust’s assets into a new trust instrument with different terms, thereby altering or amending the irrevocable original trust.
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