Aug 1, 2007 12:00 PM, By Rashad Wareh, partner, Kozusko Harris Vetter Wareh LLP, New York

By: By Rashad Wareh, partner, Kozusko Harris Vetter Wareh LLP, New York

“Irrevocable” does not truly mean “unchangeable.” Today, trustees and beneficiaries of an irrevocable trust no longer need to blindly accept the trust's terms but instead should consider whether the trust needs remodeling and, if so, whether a decanting statute may be the best means to do so.1 Trust beneficiaries often do not realize they have this option, and assume instead that the terms of a trust of which they are beneficiaries may not be changed and must be borne. Indeed, many advisors also assume that it's either impossible to amend an irrevocable trust or that the possible amendments are too limited in scope to merit the attempt. Nothing could be further from the truth.

Choosing the most appropriate decanting statute depends on the nature of the trustee's discretionary authority and whether the beneficiaries of the new trust will include contingent beneficiaries of the original trust. Today, South Dakota's new decanting statute, effective July 1, 2007, provides the most flexibility for trust remodeling.

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