Tag Archives: ILIT

‘Decant’ an Irrevocable Trust

Trust DecantIrrevocable may not mean what you think it means when it comes to trust planning.  Thanks to a process known as “trust decanting,” a trustee can change irrevocable trust terms. The decanting process occurs by figuratively pouring the trust assets from an old trust to a new trust agreement.  Just as one decants wine by pouring from an old bottle to a new one, a trustee can move trust assets to a new, more favorable trust. Nevada, along with 20 other states, has very favorable decanting laws in place.

There are limits as to what can be accomplished with decanting.  Trustees cannot alter a beneficiary’s already-vested interests in a trust.  However, a trustee can push back the age at which the beneficiary receives a payout.  Importantly, the trustee can change the governing law of the trust by moving the situs of the trust.  Nevada is the premier domestic self-settled spendthrift trust state so many trustees look to move their assets to Nevada.  In addition, if there is no successor trustee named, decanting can make it possible to name a proper successor trustee.

Nevada law is very favorable because there is no statutory requirement to notify beneficiaries of the decanting.  The trustee does not need to provide beneficiaries copies of the existing or new trust documents.  These privacy protections greatly favor the use of Nevada trust laws.  The trustee has discretion to seek court approval for the decanting process but is not required to do so.  In reality, the vast majority of trustees seek beneficiary approval before starting the procedure to decant the trust assets.

There are uncertain implications for gift, income, and generation-skipping transfers taxes. The Internal Revenue Service has not issued guidelines related to the federal tax issues presented by decanting.  However, the IRS has solicited comments for several years now and guidance should be forthcoming.  Even without federal income tax guidance, there are state income tax savings to be achieved by moving trust assets to a state like Nevada without income tax.

Don L. Ross Presents at “It’s Your Estate” Seminars

KNPB Channel 5 and the Community Foundation of Western Nevada, along with 10 other non-profit sponsors, present a series of free, in-depth workshops on estate planning and family financial planning, “It’s Your Estate.”

Don L. Ross, Esq., will present on advanced estate planning topics including AB trusts, life insurance trusts, and grantor retained annuity trusts.  Don will present at the following times and locations:

Tuesday, April 26, 2011, 11:00 a.m. at the North Valleys Library, 1075 North Hills Blvd #340, Reno.

Wednesday, April 27, 2011, 2:00 p.m.  at the Spanish Springs Library, 7100 Pyramid Highway, Sparks.

Thursday, April 28th, 2011, 3:00 p.m. at the South Valleys Library, 15650A Wedge Parkway, Reno.

You can call Sandy at the Community Foundation 775-333-5499 to reserve your spot at the class location of your choice!