Need to Change an Existing Trust?
 Decanting a Trust Under New York EPTL §10-6.6

by David Goldfarb

Are you unsatisfied with an existing trust? Were there mistakes made in the trust? Have circumstances changed?

Under New York law, an authorized trustee with unlimited discretion over principal in any trust or an authorized trustee with the power to invade trust principal but without unlimited discretion may appoint the principal into another trust for a beneficiary, and may exercise this power without obtaining the consent of the parties interested in the trust and without a court order. This power is commonly referred to as “trust decanting.”

In 2011, the New York legislature amended New York statute EPTL §10-6.6, which addresses the rights of trustees to decant assets from an irrevocable trust to another trust. While New York was the original trailblazer, many other states followed our strict decanting statutes with more flexible laws. New Yorkers, however, can now enjoy a more flexible and modernized decanting statute as well.

Previously, a trustee needed absolute discretion to “exercise a power of appointment” from one irrevocable trust to another. Now, a trustee no longer needs unlimited discretion to invade the trust principal, but simply must have the power to invade the trust principal for any reason. Trustees with limited discretion, however, may face some constraints. For example:

  • For trustees with limited discretion, the beneficiaries for both trusts must match exactly
  • Trustees with unlimited discretion can exclude some beneficiaries of the initial trust from the new one

A written and signed instrument must specifically state how much—if not all—of the invaded trust’s assets the trustee will decant. The trustee must present this instrument, the original trust, and the appointed trust to the following parties:

  • The trust settlor (if still alive)
  • Any interested parties in the invaded trust
  • Any interested parties in the appointed trust
  • Any party with the rights associated with the invaded trust to replace or remove the trustee who exercises the decanting power

Any interested parties have the opportunity to file written objections to the decanting, but parties only with the power to remove the trustee may not be able to object. In some situations, the trustee must also file the decanting instrument with the court that has jurisdiction over the original trust. The trustee also has the option of seeking approval from the court to exercise the power and decant.

Furthermore, when decanting, the trustee must abide by a fiduciary duty and act in a prudent manner with the best interests of the beneficiaries and other interested parties in mind. If the settlor would not have wanted assets decanted, the trustee should not exercise this power. The law does not require a trustee to decant or refrain from decanting.

Decanting a trust can form a practical alternative to other types of trust modifications that may require the agreement of all interested parties. However, a trustee should always fully understand their rights, requirements, and restrictions when considering exercising such power under these complicated laws.


Contact a New York Trusts Attorney for Assistance

Always accomplish important estate planning maneuvers such as decanting a trust with the guidance of an experienced estate planning attorney. If you want information about trusts or other estate planning services, call Goldfarb Abrandt Salzman & Kutzin LLP at (212) 387-8400 or contact our office online to set up a meeting today.