Trust decanting allows a trustee to transfer assets from an existing irrevocable trust to a different irrevocable trust and may be used to address a wide array of issues, including correcting drafting errors, changing distributions standards or beneficiary powers of appointment, amending administrative provisions, and updating fiduciaries and their powers.
In years past, irrevocable trust modifications primarily relied on costly and public judicial reformations or sales of assets from one trust to another (with associated administrative and valuation complexities). Now, with more states accepting and authorizing the process, trust decantings can be used to achieve the same modifications without the complications associated with sales and reformations. Decanting can make existing trusts more viable for use in future planning, which is likely of particular appeal for life insurance purposes, since the use of a pre-funded trust may avoid the need to develop a separate premium funding arrangement for a trust-owned policy.
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