Trust decanting. It’s a fancy and fascinating sounding topic, right? Well, maybe only to my estate planning peers. Nevada updated its trust decanting statute this last legislative session and the changes become effective on October 1, 2015, and can be found in Senate Bill 484.
You may have heard of decanting for liquids. Let’s say that I don’t like the container that is holding my lemonade. I can take my lemonade and pour it, or decantit, into a nicer container. Maybe it’s a nice glass pitcher. Perhaps it’s an etched crystal carafe in which it can better breathe.
Of course nobody really decants lemonade. I’m pretty sure decanting is reserved to liquor and wine.
But it’s an analogy to what is available for an irrevocable trust. Trust decanting allows an irrevocable trust’s assets to be poured to another irrevocable trust. Often, the goal of the decanting is to change some quality of the original trust or to fix something that was overlooked. Nevada’s statutes detail what is permitted to be changed in the new or second trust and the changes in our state law are an attempt to remain competitive with other states that cater to capturing trust business.
A few examples of why someone might want to decant a trust:
Nevada’s decanting statute also makes clear that an irrevocable trust that was created in another state, but which has the ability to change situs to Nevada, is eligible to fully utilize Nevada’s decanting statute. The statute also confirms that the Trustee of the original trust is permissible to be the settlor of the second trust.
The statute governing trust decanting in Nevada is NRS 163.556.
- Attorney Jason C. Walker