Trusts often offer long-term stability, although, sometimes, they can have outdated provisions that no longer make sense. For instance, a trust created under old tax laws or one whose beneficiary’s needs may have changed might need to be modified to reflect the new needs. Traditionally, to modify an irrevocable trust, you needed to go to court. Florida law now allows trustees to “decant” a trust into a new one with better terms without court approval.
Decanting a trust is like pouring wine into a new bottle: The contents stay the same, but the container is updated. A trustee moves assets from an old, restrictive trust into a new one with improved terms. This process can:
In Florida, decanting has been legal since 1940. However, a 2018 law expanded what trustees can do. Now, even trustees with limited power, including those managing distributions for health, education, maintenance, or support (HEMS), can decant in some cases.
One of the biggest advantages of Florida’s decanting statute is that trustees don’t need court approval if they follow the right steps. The law requires:
While decanting can be a great tool, it has limitations. Trustees cannot use it to eliminate a beneficiary’s interest or increase their own compensation. Additionally, tax consequences need to be considered. For example, changing the trust too much could create unintended tax liabilities.
Another issue is that some beneficiaries might not agree with the changes. If they object during the 60-day period, the trustee may need to go to court after all.
Under Florida laws, trustees have the power to modify outdated trusts. You just need to be careful when exploring this option. If you’re considering modifying a trust through decanting, Schnauss Naugle Law can help you explore your options and avoid legal pitfalls. Contact us today to learn more.
