Decanting Statutes and Irrevocable Trusts
Once created, irrevocable trusts are normally unable to be altered. This is the point of such a trust, really, and generally works to the advantage of the grantor and beneficiaries. However, there are situations in which a change becomes necessary. The process of decanting can be quite complex, and it is important to work with knowledgeable Kingwood estate planning lawyers.
What Is Decanting?
Texas is one of 21 states that now have decanting statutes. These allow the grantor of an irrevocable trust to make changes to it when extraordinary circumstances arise. Without a decanting statute, it would be impossible to make such changes without a prolonged court action which might well not yield positive results.
Some Reasons for Decanting an Irrevocable Trust
A grantor may wish to decant a trust for any number of important reasons, but the following are some of the more common:
- A drafting error was made and needs correcting.
- A beneficiary needs to be added or removed. For instance, a child who is a beneficiary might die before the grantor.
- The grantor decides that it is necessary to change provisions for distribution of the trust.
- The grantor wishes to combine the trust with another.
- It is decided that the irrevocable trust should be changed from a grantor trust to a non-grantor trust.
- The grantor wishes to terminate the trust.
- The grantor decides to lengthen the term of the trust.
- The grantor wishes to grant certain powers of appointment.
Factors Which May Complicate Decanting
As mentioned, decanting can be a complex process. Sometimes trustees fear being left exposed to liability with decanting. Also, the process can be very long and expensive, and beneficiaries may not agree with the changes. Moreover, given that decanting is a relatively recent development, there is still some uncertainty as to how it works. For instance, in decanting the trust is the first one thereby terminated and a new one created, or is the first one merely altered? Indeed, the latter contradicts the nature of an irrevocable trust.
Work with a Strong Estate Planning Attorney
If you wish to decant an irrevocable trust, or you have another estate or probate matter that needs attention, our Kingwood estate planning attorneys can help. Call Peterson Law Group to arrange a consultation today at 281-609-0664 or 832-786-5062.