Sometimes, the terms of a Massachusetts irrevocable trust no longer adequately serve its beneficiaries, or the trust itself was not properly drafted initially. If this is the case, it may be possible to decant the current irrevocable trust under certain circumstances. The option to decant such a trust can be crucial since these trusts normally may not be changed or cancelled.
Decanting allows the assets from one irrevocable trust to be distributed into a new trust with better terms. Employing this technique may only be used in certain instances. The trustee must have the ability to manipulate the principal of the trust. Many irrevocable trusts give the trustee the right to distribute assets only, in which case decanting is not an option.
However, if the trustee has been given the right to exercise his or her discretion when it comes to the principal of the trust, it may be decanted. Reasons for decanting vary. However, one reason would be to ensure the longevity of the trust for generations to use for protection against estate taxes, divorce, bankruptcy and creditors. Separating the responsibilities of the trust would be another.
Regardless of the reason, a Massachusetts irrevocable trust can only properly serve a family if its provisions are in line with a family’s needs and is properly drafted. If a current trust no longer functions in this manner, decanting may be the way to fix any issues. A thorough review of the current trust and conversations about what is desired may lead to the conclusion that a change is needed and possible.
Source: investmentnews.com, 10 reasons to consider decanting an irrevocable trust, Darla Mercado Advertisement Advertisement, Dec. 2, 2013