What is decanting in the context of trusts, and what is its purpose?

What is decanting in the context of trusts, and what is its purpose?

• A. Transferring assets from one trust to another with revised terms to correct defects, add flexibility, or better meet goals.
• B. Liquidating a trust entirely.
• C. Sanctioning trustee's personal use of trust funds.
• D. Creating a new trust with identical terms.

Answer: (A)

Decanting is the trustee’s power to move assets from an existing trust into a new trust with updated or different terms. The goal is to fix drafting defects, add flexibility, or better align the trust with current needs and goals. By transferring into a new trust, the terms can be cleaned up, distribution rules adjusted, or protections added, all while continuing the beneficiaries’ interests under refreshed provisions. It is not about liquidating the trust, nor about misusing trust funds, nor about creating a new trust with the same terms, so the best choice describes transferring to a new trust with revised terms to remedy issues and improve how the trust operates.

Decanting is the trustee’s power to move assets from an existing trust into a new trust with updated or different terms. The goal is to fix drafting defects, add flexibility, or better align the trust with current needs and goals. By transferring into a new trust, the terms can be cleaned up, distribution rules adjusted, or protections added, all while continuing the beneficiaries’ interests under refreshed provisions. It is not about liquidating the trust, nor about misusing trust funds, nor about creating a new trust with the same terms, so the best choice describes transferring to a new trust with revised terms to remedy issues and improve how the trust operates.