Setting up a trust is a way that a person can ensure their loved ones get the assets they want them to have. Some of these trusts are irrevocable, which means they can’t be changed or cancelled once they’re established.
Trustees are responsible for taking care of irrevocable trusts. When it comes to irrevocable trusts, they are incredibly limited in what they can do. There are times when leaving an irrevocable trust as is will do more harm to the beneficiaries than making some changes.
Washington has a tool available for trustees to move a trust’s assets into a new trust. This is known as decanting the trust. It can be used to update the terms of the trust or fix a problem, but it must retain the original meaning of the trust.
What are some situations when decanting a trust might be necessary?
Decanting a trust might be necessary if tax or estate planning laws change in a way that makes it irresponsible to keep the original trust. It’s also possible in certain other situations, such as:
- Original trust’s rules are outdated or ambiguous
- A beneficiary’s needs change
- More protection is needed from creditors
- Trusts need to be combined or simplified
In Washington, a trustee can only decant a trust if the powers they have within the trust allow for moving assets or changing how the trust is paid out. Not all trusts allow this, and the original powers given to the trustee must be respected.
Decanting a trust can be a smart option for changing a trust when it meets certain criteria. It’s critical that anyone who’s considering this action understands the scope of their power and how decanting will impact the trust and beneficiaries.
