Estate Analyst: Decantation Deliverance

Posted on May 3rd, 2014 at 10:00 AM

By: Robert L. Moshman, Esq.

New statutes governing the decanting of trust assets have sprung up in 10 new jurisdictions over the past two years and the trend appears to be continuing.

Why is there so much interest in the decanting technique? How do the various state decanting statutes compare? Is decanting preferable to the alternatives?

Here, we provide some context on the decantation trend and consult esteemed chartmeister Steven J. Oshins, Esq. for comparative analysis of state approaches.

A Sketchy Past

In the wilderness of states without decanting statutes there is arguably a common law basis for decanting based on what may be the first decanting case in the United States, Phipps v. Palm Beach Trust Co., 196 So. 299 (Fla. 1940). At least the American College of Trusts and Estates Counsel (ACTEC) made that observation in commenting on IRS Notice 2011-101
in a letter published in April, 2012.

However, there is a paucity of definitive case law on decanting. Instead, there is a patchwork of cases spread over 74 years and 50 states. After Phipps from Florida came Wiedenmayer v. Johnson, 106 N. J. Super 161 (1969), In re Estate of Spencer, 232 N.W.2d 491, 493–95 (Iowa 1975), and two recent additions, Morse v. Kraft, 992 N.E.2d 1021 (Mass. 2013), and Ferri v. Powell-Ferri, MMX-CV-11-6006351-S (August 23, 2013).

Within any given state, there is a simmering quiche of cases involving divorce, powers of appointment, and areas that 
aren’t quite on point or which rely on the few decanting cases from neighboring states. Understandably, trustees have been
reluctant to test this unpredictable common law pastiche. 

The common law basis for decanting follows the logic that a trustee with discretionary authority to distribute assets has, in
effect, a power of appointment to transfer the assets into a new trust. This is consistent with provisions of the Restatement
(Second) of Property: Donative Transfers and the Restatement (Third) of Property: Wills and Other Donative Transfers...

For more, read the full PDF here.

Related Attorneys: James J. Eccleston

Tags: Robert L. Moshman, Moshman, Estate Analyst

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We just wanted to say thanks for your work in helping us get back some of the money we lost. We are not by any means rich, but we have saved some money and we have done so through a tight-fisted approach to most everything we do. So losing a significant chunk of money hurt…especially at a time when everyone else was growing their accounts. We really appreciate the work you did.

Allan and Adele


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