A revocable trust can be changed or revised, while an irrevocable trust cannot be changed. However, in Florida, there is a process called decanting that allows for the transfer of assets from one trust to another, providing some flexibility for addressing changes in circumstances or laws. Decanting is like pouring wine from one container to another, allowing the trust assets to conform to the parameters of the new trust without changing the assets themselves. This can be useful for addressing the needs of beneficiaries, including those with special needs. Decanting is a way to fix problems in a trust or make changes to it. It can be used to save money on taxes, change where the trust is based, give the trustee more or less power, control who gets information about the trust, protect the trust from creditors, fix mistakes in the trust document, split or combine trusts, change who gets the trust money, and make sure there is a new trustee in the future. It can also be used to change how the trust money is given out, especially for someone with special needs. There are lots of ways to use decanting to help a trust. Decanting, the process of moving trust assets to another trust, has been around for a long time but has evolved over the years. In 1992, New York passed the first decanting law, and since then, many other states have followed. In 2007, Florida also passed a law allowing trustees to decant. This allows a trustee with the power to distribute trust funds to move those funds to a new trust for the benefit of the same beneficiaries. Originally, the law only applied to trusts with unlimited distribution power, but has since expanded to include more types of trusts. Florida’s decanting statute, which allows changes to irrevocable trusts, has been updated to give more power to trustees to make changes. The new law allows any trustee, except the person who created the trust or a beneficiary, to make changes to the trust. This means that the person who created the trust can’t make changes, but they could appoint someone else to do it. Also, a trustee who is also a beneficiary can’t make changes to the part of the trust that benefits them, but they could split the trust into separate parts and make changes to the parts that don’t benefit them. Decanting is when a trustee of a trust moves some or all of the money from one trust to another. This can change who gets the money and how the trust is managed. The power to do this depends on how much control the trustee has over the money in the trust. The more control they have, the more changes they can make. For example, if the trustee has complete control over the money, they can make big changes like adding or removing beneficiaries or extending the trust beyond its original time limit. If they have less control, they can still make changes but they are more limited. Decanting with limited power means that a trustee can’t make big changes to a trust that would drastically affect the beneficiaries. The new trust has to have similar benefits for the beneficiaries as the original trust. This rule might make it hard for a trustee to add protections for beneficiaries, like holding off on giving them money if they have a drug or money problem. Even though the concept of “substantially similar” is supposed to limit a trustee’s power, an authorized trustee still has a lot of power to change a trust. If the trustee extends the time period of the trust, they can also change the beneficiaries and give themselves more power over the trust’s property. There are also rules about how a trustee can change a trust to help disabled beneficiaries, which can be really helpful for people who need government benefits. Overall, trustees have a lot of power to change trusts, especially when it comes to helping disabled beneficiaries. A âbeneficiary with a disabilityâ is someone who may qualify for government benefits based on disability, even if they are not receiving those benefits. The trustee can change the trust to help the beneficiary qualify for these benefits. The âgovernment benefitsâ are financial aid or services from a public agency, not from a private company. A âsupplemental needs trustâ is a trust that the trustee believes would not be counted when determining if the beneficiary is eligible for government benefits. This means that the trust can help the beneficiary qualify for benefits like SSI and Medicaid. If someone has a trust, they may be able to change it to help someone who is disabled and receiving government benefits. This can help the person qualify for more benefits in the future. The trustee can only do this if it follows the original purpose of the trust, which is usually to support the beneficiary. Imagine there’s a trust set up for someone with a disability. The trustee can give them money until they’re 25, then they can get the income and some of the trust money. At 30 they get a third of the money, at 35 they get half of what’s left, and at 40 they get the rest. If the disabled person is 26 or older, the trustee can move the money into a special trust that can help them out for their whole life, and whatever’s left goes to their siblings when they die. But the trustee can’t change who gets the money after the disabled person dies. Floridaâs trust decanting law has changed a lot, making it easier for irrevocable trusts to be changed if needed. This allows the trust to adapt to unexpected situations. The purpose of the trust is important when considering if decanting is allowed. Itâs best to have clear language in the trust document about what the trust is meant for. More detail is helpful, but itâs important to be accurate. In the next part of the article, I will talk about how decanting works and how it can affect people with special needs who are beneficiaries of the trust. This text talks about different laws and court cases related to trust modification and reformation. It also mentions the Uniform Trust Code and the Uniform Trust Decanting Act. The main idea is that these laws and actions help fix errors in trusts and make changes to them when needed. Several states have passed laws that allow trusts to be changed or “decanted.” This means that the terms of a trust can be adjusted to better fit the needs of the beneficiaries. These laws have been passed in the last few years and are becoming more common. Even though the official term for this process is “decanting,” not all states use this term in their laws. Florida, for example, specifically explains the power to change a trust in their laws. The Uniform Trust Decanting Act was created in 2015 and has been adopted in several states, but not in Florida. This means that Florida’s rules for changing a trust are slightly different. In Florida, the person who created the trust, called the settlor, cannot have too much control over the trust’s assets, or else it could affect their taxes. Also, in Florida, only a trustee can make changes to a trust, while the Uniform Trust Decanting Act allows a wider range of people to do so. Overall, Florida’s rules for changing a trust are more specific and limited compared to the Uniform Trust Decanting Act. Florida law allows for the “decanting” of trusts, which means transferring the assets of one trust into a new trust with different terms. This can be done to better meet the needs of the beneficiaries. There are specific rules that need to be followed when decanting a trust, such as not reducing a beneficiary’s vested interest. There are also rules about the types of trusts that can be decanted. For example, trusts that are set up to pay back Medicaid liens can be tricky to decant. Decanting a trust can be a useful tool, but it’s important to follow the rules to make sure it’s done correctly. If the money that someone was supposed to get at age 30 from a trust hasn’t been given to them yet, it might be treated as a special needs trust for government benefits. Amy J. Fanzlaw is a lawyer who specializes in this area and helps people plan for their future. She is certified in wills, trusts, and estates, and elder law. This information is from the Elder Law Section.
Source: https://www.floridabar.org/the-florida-bar-journal/new-opportunities-to-decant-in-florida-part-irecent-changes-to-the-trust-decanting-statute/
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