What is Decanting a Trust?
Decanting a trust refers to the process of transferring assets from one trust to a new trust with different terms while maintaining the original beneficiaries. It is typically done to achieve certain goals such as updating the trust's terms, changing administrative provisions, or addressing tax issues.
While decanting can be a legitimate and legal estate planning tool, there are concerns about its potential misuse or abuse:
Disinheriting beneficiaries: One concern is that the trustee could use decanting to distribute trust assets in a way that disadvantages or completely disinherits certain beneficiaries without their consent or knowledge.
Lack of transparency: The process of decanting may not always require the involvement or approval of all beneficiaries, which can lead to a lack of transparency and possible exploitation.
Circumventing the trust's original purpose: Decanting might be used to change the trust's terms to circumvent the grantor's original intent, potentially favoring some beneficiaries over others.
International wire transfers: If sophisticated individuals wire trust assets to different countries, it could make it challenging for beneficiaries to recover the assets or pursue legal action, especially if the laws in those countries are less favorable or cooperation with U.S. jurisdiction is limited.
Difficulty in detection: As beneficiaries may not be aware of the decanting process or its consequences until months or years later, it becomes challenging to detect any wrongdoing or inappropriate actions in a timely manner.
To address these concerns and protect beneficiaries' interests, it is essential to have proper oversight and monitoring of the trust assets. This can involve regular communication and transparency between trustees and beneficiaries, and potentially involving legal professionals to ensure compliance with the applicable laws and the trust's original intent.
If you suspect any misconduct or misuse of a trust, seeking legal advice from an attorney with expertise in trust law and estate planning can be crucial in understanding your rights and options for addressing the situation. However, it is important to note that decanting is subject to specific state laws, and not all jurisdictions allow this practice.