Trust Decanting (Portfolio 871)

Description

Tax Management Portfolio, Trust Decanting, No. 871, discusses the distribution of trust property further in trust pursuant to a trustee’s power to distribute property to trust beneficiaries, commonly referred to as trust decanting.

Trust decanting generally refers to the exercise of a trustee’s discretionary power to distribute trust property to trust beneficiaries by distributing such property to another trust for the benefit of one or more of such beneficiaries. Although trust decanting may be authorized under common law, many states have enacted trust decanting statutes allowing a trustee to appoint trust property in favor of another trust.

This portfolio examines the common law background of trust decanting, trust decanting statutes, potential uses or applications of trust decanting, and potential tax consequences of trust decanting. Examples are used to illustrate and discuss various issues.

This portfolio may be cited as Culp & Bennett Mellen, 871 T.M., Trust Decanting.

Table of Contents

I. Introduction
II. Decanting Under Common Law
III. State Decanting Statutes
IV. Tax Treatment of Decanting
V. Fiduciary, Ethical, and Practical Considerations
VI. Comparison to Trust Modifications, Mergers, or Divisions
VII. Planning Opportunities