Trust Decanting

Trust decanting allows a trustee to transfer assets from one trust to another, creating a new trust with different terms. This can be done without court approval as long as the trustee has the discretion to distribute assets and follows fiduciary duties, and proper notice is given.

A trustee of a family trust has the authority to distribute income to beneficiaries at their discretion. After reviewing the trust's terms, the trustee decides to decant the trust into a new trust that allows for more flexible distributions and lower administrative costs. The trustee provides notice to the beneficiaries and proceeds with the decanting, which is valid under the law.

Decanting: pour assets into a new trust without the court's cup!

Exams may confuse students by including scenarios where the trustee lacks proper discretion or fails to give notice, leading to invalid decanting.

Questions often present fact patterns involving a trustee's decision-making process and the requirements for valid decanting, testing candidates on their understanding of fiduciary duties and notice requirements.