Terms That a Trustee Can Modify
If a grantor or trustee wants to exercise decanting power, they must:
- Exercise their fiduciary duty, meaning that any change must be in the best interest of both the trust and its beneficiaries
- Honor the intent of the original trust, insofar as a decanting trustee cannot impose any radical alterations to the original trust’s structure and composition
You could use decanting to make the following sorts of changes to a pre-established trust:
- Eliminate current beneficiaries
- Designate a current beneficiary as a remainder beneficiary
- Designate a remainder beneficiary as a current beneficiary
- Change certain standards for asset distribution
- Modify trust appointments
- Alter trustee provisions and role designations
Terms That a Trustee Cannot Modify
While trustees may have the power to decant a trust, they cannot decant a trust to:
- Increase their compensation or the compensation of another trustee
- Exempt a trustee from legal liability in the event of litigation or breach of fiduciary duty
- Grant a third party the authority to remove or replace an existing trustee
How to Decant a Trust In California
If you have established a decantable California trust, you do not need to inform the courts of your intent to decant.
However, you must still provide 60 days’ notice to:
- The trust’s settlor, if you are not the settlor
- Each qualified beneficiary
- Any individual who has an exercisable power of appointment over the original trust
- Each person with the power to remove or replace current trustees
- All the trustees of the original trust
- All the trustees of the new trust
- The Office of the Attorney General of California, if the trust contains certain charitable elements
Your notice must comply with the Uniform Trust Decanting Act’s other provisions. You must, for instance, include specific language informing the recipients of their right to contest the decanting.
You should always contact a California estate planning attorney before decanting a trust. If you do not have an experienced professional’s guidance, you could inadvertently violate the Uniform Trust Decanting Act’s notification requirements, as well as other decanting statutes that have been recently introduced.
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