Trust decanting is a powerful estate planning technique that allows you to modify an existing irrevocable trust by transferring its assets into a new trust, effectively “decanting” the original trust’s contents. This process is often undertaken to adapt a trust to changing circumstances, such as shifts in tax laws, beneficiary needs, or family dynamics, without triggering the adverse tax consequences that would typically occur with a full trust amendment or termination. While relatively new, gaining prominence in the past two decades, trust decanting is now authorized in most states, including California, offering significant flexibility in estate planning. It’s a bit like pouring wine from an old bottle into a new, more suitable one – the wine (assets) remains the same, but the container (trust) is updated.
Can I change an irrevocable trust?
Traditionally, the rigidity of irrevocable trusts presented challenges when circumstances changed. Once established, modifications seemed impossible without incurring significant tax implications. However, trust decanting bypasses these limitations. It allows a trustee, with the proper authority outlined in the original trust document or granted by a court, to distribute assets from the original irrevocable trust to a new trust with different – and potentially more advantageous – terms. According to a 2023 study by the National Center for Philanthropy, approximately 35% of irrevocable trusts require adjustments within the first decade due to unforeseen life events or changes in tax regulations. Decanting avoids the triggering of gift or estate taxes that would normally accompany a direct amendment or termination.
What are the benefits of trust decanting?
The benefits of trust decanting are numerous. It can allow you to take advantage of updated tax laws, such as increased estate tax exemption amounts, or to address changing beneficiary needs. For example, a trust established years ago might not adequately provide for a beneficiary with special needs. Decanting into a special needs trust can ensure their long-term care without jeopardizing government benefits. “We’ve seen a significant rise in decanting requests, particularly among clients with older trusts established before the Tax Cuts and Jobs Act of 2017,” explains Steve Bliss, a Living Trust and Estate Planning Attorney in Escondido. “The increased estate tax exemption created opportunities to streamline trusts and minimize potential tax liabilities.” Furthermore, decanting can protect assets from creditors or lawsuits, and allow for greater flexibility in how and when distributions are made.
What went wrong for the Millers?
Old Man Miller was a proud man, set in his ways. Back in 1998, he established an irrevocable trust to protect his assets and provide for his grandchildren. Years passed, and the tax laws changed significantly. His daughter, Sarah, noticed the trust was becoming increasingly inefficient due to the outdated provisions. The original trust didn’t account for the dramatically increased estate tax exemption, resulting in unnecessarily high potential tax liabilities. She contacted several attorneys, but many insisted that the only way to fix the problem was to terminate the trust, triggering a hefty tax bill. Desperate, she turned to Steve Bliss, who immediately recognized the potential of trust decanting. The original trust document, while rigid, didn’t explicitly prohibit decanting, allowing Steve to navigate the legal complexities and implement a solution that saved the family a substantial amount in taxes and preserved the original intent of the trust.
How did the Andersons get it right?
The Andersons were proactive. Their trust, established fifteen years ago, had served them well, but they recognized the need to update it in light of recent changes in their family and the tax landscape. Their youngest daughter, Emily, had developed a chronic illness requiring long-term care, and they wanted to ensure she was adequately provided for without disqualifying her from government assistance. They consulted Steve Bliss, who recommended decanting the existing trust into a special needs trust, designed to supplement, not replace, public benefits. The process was seamless, and the Andersons gained peace of mind knowing Emily’s future was secure. They weren’t scrambling to fix a problem; they were proactively adapting their estate plan to ensure it continued to meet their needs. Steve explained, “It’s far easier, and significantly less expensive, to address potential issues proactively through decanting than to try and fix them after a crisis has occurred.” By following best practices and seeking expert legal counsel, the Andersons transformed a potential challenge into a successful outcome.
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About Steve Bliss at Escondido Probate Law:
Escondido Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
estate planning
living trust
revocable living trust
family trust
wills
banckruptcy attorney
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/oKQi5hQwZ26gkzpe9
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Address:
Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “How can I leave charitable gifts in my estate plan?” Or “What is summary probate and when does it apply?” or “What happens to my trust after I die? and even: “Are student loans forgiven in bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.