A possible option to assist with amending an irrevocable trust is a process called decanting. Essentially, decanting a trust means to distribute the assets from one trust to a new trust – with the same beneficiaries , but with amended terms. The rationale that underlies decanting is that if a trustee has the discretionary power to distribute property to, or for the benefit of, one or more current beneficiaries, then the trustee has a special power of appointment that should enable the trustee to distribute the property to a second trust for the benefit of such beneficiaries.
Decanting is accomplished by an instrument in writing, signed, dated and acknowledged by either the grantor or the trustee of the existing trust. The instrument must state whether all of the existing trust assets or a percentage of them are being decanted. Then, either (1) a copy of the existing trust agreement, the appointed trust agreement and the executed decanting power must be served on all interested parties (the grantor of the existing trust (if living), the grantor of the appointed trust, the beneficiaries of the existing and appointed trust, anyone who has the power to remove and replace the trustee of the existing trust) either personally or by certified mail; or (2) written consent of all interested parties may be obtained after providing them with copies of all documents. The exercise of the decanting power becomes effective thirty (30) days after service is complete (unless the parties consent in writing to an earlier date).