What is Delaware’s “decanting” statute for trusts?

When it comes to managing trusts, Delaware stands out with its innovative approach. One of the key features that make Delaware an attractive destination for trust management is its “decanting” statute.

For trust holders looking to maximize value, it is important to understand this statute and why it matters.

What is decanting?

Decanting refers to the process of moving assets from one trust to another with different terms. As with decanting wine, one might pour wine from one bottle to another, but with trusts instead. This process allows trust administrators to modify the terms of an existing trust to better suit the needs of the beneficiaries.

How does Delaware’s decanting statute work?

Delaware’s decanting statute grants trustees the authority to transfer assets from an irrevocable trust to a new trust, altering the terms and provisions. This flexibility can be incredibly valuable in situations where the original trust no longer aligns with the beneficiaries’ needs or changing circumstances.

What are the benefits of Delaware’s decanting statute?

Moving an existing trust to Delaware to take advantage of its decanting statute offers several benefits:

  • Flexibility: Trustees can adjust trust provisions to accommodate changing family dynamics, or estate planning goals without the need for court approval.
  • Asset Protection: Delaware’s trust laws provide robust asset protection, shielding trust assets from creditors.
  • Tax Efficiency: Delaware offers favorable tax laws for trusts, including no state income tax on trusts for non-residents.
  • Privacy: Delaware allows trusts to remain confidential, offering privacy to beneficiaries and protecting sensitive financial information from scrutiny.

Delaware is also home to many experienced trust companies and professionals who can provide expert guidance and administration services.

Delaware’s decanting statute offers trust holders a powerful tool for managing and adapting their trusts to changing circumstances. Trustees can modify trust terms without court intervention. With this, Delaware provides a level of flexibility and control that may not be available in other jurisdictions.



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