Tips From the Pros: Can Decanting be a Gift?Tips From the Pros: Can Decanting be a Gift?

The term “decanting,” when used in the context of trust administration, refers to a transaction whereby a trustee exercises discretionary distribution authority set forth in an existing trust instrument by distributing not directly to the target beneficiary but, rather, to a new trust for the benefit of the target beneficiary and perhaps one or more others.¹ “Decanting” may also refer to a modification of a trust instrument, carried out unilaterally by the trustee, having fundamentally the same end result as a decanting without actually moving trust property to a new trust.² Whether a trustee distributes to a new trust or modifies the governing instrument of an existing trust, the trustee is performing a function in his fiduciary capacit...