13 Jul

How to Fix a Trust That Isn’t Getting Better With Age

Manya Deva Natan
Manya Deva Natan is a California Bar Certified attorney with the law firm of SSS Legal & Consultancy Services located in Calabasas, CA. Her practice focuses on International Estates, Trusts and Estates, Asset Protection, Trust Administration, and more. Manya received her law degree from Stanford University, as well as a Master's in International Affairs from Columbia University. She has completed extensive course-work and training in the areas of mental, physical, and emotional health, including being a published author. She is the founder of two publishing-based companies related to health and wellness and has particular interest in the legal and financial components of health and their importance in integrated health. She has appeared multiple times on Good Morning America and is regularly contacted by national media outlets for commentary.
Manya Deva Natan

Middle-aged Man with Birthday Cake

While many wines 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?


Wine lovers know that the term “decant” means to pour wine from one container into another to open up the aromas and flavors of the wine. 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:


Tweak the trustee provisions to clarify who can or cannot serve as the trustee.


Expand or limit the powers of the trustee.


Convert a trust that terminates when a beneficiary reaches a certain age into a lifetime trust.


Change a support trust into a full discretionary trust to protect the trust assets from the beneficiary’s creditors.


Clarify ambiguous provisions or drafting errors in the existing trust.


Change the governing law or trust situs to a less taxing or more beneficiary friendly state.


Add, modify, or remove powers of appointment for tax or other reasons.


Merge similar trusts into a single trust for the same beneficiary.


Create separate trusts from a single trust to address the differing needs of multiple beneficiaries.


Provide for and protect a special needs beneficiary.


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.

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