Very often, careful estate planning includes
Irrevocable Trusts for tax advantages. Such trusts can hold many types of assets such as
businesses, investments, life-insurance policies, and even cash. Upon
death, the Trust is passed on
without estate taxes. These tax advantages are available because the creator of
the Trust, the Grantor, gives up control of the Trust. This is why the
Trust is called
The circumstances and environment where a Trust is created, however, are
not always held constant throughout the life of the Trust. Life situations
change, tax laws change. The value of the assets in the trust may even
change. It is often desirable to alter the provisions of an Irrevocable
Trust. The law, of course, provides many avenues by which
Irrevocable Trusts can be changed or even revoked.
Historically, modifying an Irrevocable Trust required a long process including
a potentially costly trip to court - along with all the publicity that
would entail. More recently, some states have introduced laws that allow
Decanting an Irrevocable Trust. This is a process where the assets of the existing
Trust are moved to a new Trust - figuratively pouring the assets into
a new vessel.
Decanting can be handled without court involvement, making it a much quicker,
less costly, and more private way to handle modifications to Irrevocable
Trusts. Decanting allows changing certain terms of the Trust arrangement.
For example, the age at which the Beneficiary receives a payout may be
increased. This can also make it easier to name a new Trustee, or change
the duties of the Trustee - for example, splitting the duties among several parties.
What You Can't Do
not unlimited, of course. It is not possible to change the vested assets of a Beneficiary.
Also the new Trust does not have to include all Beneficiaries of the original
trust, but it may not add Beneficiaries. It is also required that the
new Trust maintain terms and conditions that are consistent with the tax
advantages provided by the original Trust.
Contact us to learn more about how Irrevocable Trusts can protect your estate.