Trust decanting is a powerful estate planning technique that allows a trustee to redistribute assets from an existing irrevocable trust into a new trust, essentially creating a “new” trust while preserving the original intent of the grantor as much as possible.
Can I Change an Irrevocable Trust?
Traditionally, irrevocable trusts were just that—unchangeable. This presented problems when circumstances changed, like shifts in tax laws, family dynamics, or the grantor’s wishes. Decanting offers a solution without necessarily requiring a court order to modify the original trust. It’s like pouring liquid from one container into another – the substance remains the same, but the container is new. According to a study by the American Bar Association, approximately 35 states now have laws specifically authorizing trust decanting, though the specifics vary. This allows for increased flexibility in estate planning, as it avoids the complexities and costs of terminating and recreating the trust.
“The beauty of decanting is that it allows for adaptation without necessarily destroying the original plan,” says Steve Bliss, a seasoned estate planning attorney in Wildomar. “It’s a sophisticated tool, but incredibly valuable for those facing changing circumstances.”
What are the Benefits of Decanting?
The benefits of trust decanting are numerous. Primarily, it allows you to update an outdated trust to take advantage of new tax laws or to address changes in your family situation. For example, imagine a trust established in 1990 with a specific exemption amount that’s now significantly lower than the current federal estate tax exemption. Decanting allows you to transfer assets into a new trust that utilizes the higher exemption amount, potentially saving your beneficiaries substantial estate taxes. It can also protect assets from creditors or provide for beneficiaries with special needs. Statistics indicate that roughly 20% of irrevocable trusts are considered “outdated” within a decade of their creation due to changing laws and personal circumstances.
What Went Wrong for Old Man Hemlock?
Old Man Hemlock, a gruff but loving grandfather, established an irrevocable trust in the 1970s for his grandchildren. He was a carpenter and wanted to ensure they had funds for college. However, he never updated the trust to account for rising tuition costs or changes in the tax laws. Years later, when his eldest grandson, a talented musician, applied for financial aid, the assets in the trust dramatically reduced his eligibility. The funds weren’t *enough* for a full ride, and the outdated trust terms meant the money was distributed in a way that triggered unexpected taxes. His grandson ended up taking on significant student loan debt, something Old Man Hemlock desperately wanted to avoid. The family was distressed and felt betrayed by their seemingly secure financial planning.
How Did Bliss Help the Willow Creek Family?
The Willow Creek family faced a similar situation with a trust established decades ago. Their matriarch, Eleanor, had meticulously planned for her grandchildren’s future. However, a change in tax laws threatened to drastically increase the estate tax liability. Steve Bliss stepped in and, after careful analysis, recommended decanting the original trust into a new trust that incorporated provisions to take advantage of the updated tax regulations. The process was seamless, and the family experienced significant tax savings, ensuring that more of Eleanor’s legacy would be passed on to future generations. “We treated it like a careful renovation,” Bliss explained. “We preserved the core structure while updating the wiring and plumbing to ensure everything worked optimally.” The Willow Creek family experienced peace of mind and felt secure knowing their financial plan was both effective and adaptable, a testament to proactive estate planning.
Ultimately, trust decanting is a complex but valuable estate planning tool. It’s not a one-size-fits-all solution, and it requires careful consideration of applicable state laws and the specific circumstances of the trust. Consulting with an experienced estate planning attorney like Steve Bliss is crucial to determine if decanting is the right strategy for your needs.
<\strong>
About Steve Bliss at Wildomar Probate Law:
“Wildomar 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 Wildomar Probate Law. Our probate attorney will probate the estate. Attorney probate at Wildomar Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Wildomar Probate law will petition to open probate for you. Don’t go through a costly probate call Wildomar Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Wildomar Probate Law is a great estate lawyer. Probate Attorney to probate an estate. Wildomar Probate law probate lawyer
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
estate planning attorney near me
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/RdhPJGDcMru5uP7K7
>
Address:
Wildomar Probate Law36330 Hidden Springs Rd Suite E, Wildomar, CA 92595
(951)412-2800/address>
Feel free to ask Attorney Steve Bliss about: “What’s the best way to leave money to minor children?” Or “Can a handwritten will go through probate?” or “Can I name more than one successor trustee? and even: “Do I need a lawyer to file for bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.