Decanting
Irrevocable doesn’t always mean unchangeable.
Decanting, appropriately referred to as a “do over,” is essentially distributing assets from an existing irrevocable trust into a new trust with different and presumably more desirable and flexible terms. The unwanted provisions remain behind in the original trust and are no longer applicable to the transferred assets.
Under South Dakota law, decanting may also be used to modify the existing trust without requiring the creation of an entirely new trust, providing another flexible option for adapting an irrevocable trust to changing circumstances.
Trust Decanting
Allows an irrevocable trust to evolve through decanting to meet a family’s changing needs, often without court involvement.
Decanting has become one of the most progressive planning strategies available for modifying irrevocable trusts and addressing Dynasty Trust planning issues, and is applicable to both domestic and international trusts.
Creates a streamlined option for transferring a trust from one jurisdiction to another more favorable jurisdiction, such as South Dakota.
Jurisdiction Matters
Comparing Decanting Statutes
Many states do not have a decanting statute and not all decanting statutes are created equally. It is important to evaluate the differences among the statutes when selecting proper situs for a trust.
To assist families and their advisors in evaluating trust jurisdictions, Bridgeford Trust Company has developed a comprehensive comparison of top-tier U.S. trust jurisdictions, including an analysis of decanting statutes and other modern trust laws that distinguish South Dakota as the superior trust jurisdiction in the overall analysis.
You can also view South Dakota Codified Law (SDCL) § 55-2-15 to 55-2-18 for more information.
Questions About Decanting?
If you would like to learn more about decanting or explore other advantages available under South Dakota trust law, reach out to us through our contact form or call us at (605) 224-9189.
