Probate & Trust Law Section Conference Manual ... - Minnesota CLE

--Intellectual property which may involve determining the extent of legal ownership and
rights, valuing interests, entering into contracts involving the property and enforcing
legal rights against infringement; and
--Trust-owned life insurance which requires monitoring existing policies for performance
and efficiency, in addition to being aware of newer products that may offer better
coverage options and be more cost efficient. It may be especially vital to delegate this
role where the trust holds a portfolio of policies.
Decanting
Trustees and beneficiaries are often challenged with the existing terms and provisions
in irrevocable trusts. Sometimes drafting errors or ambiguities make it difficult or costly
for trustees to fulfill their duties to the beneficiaries. Some trusts lack the provisions
necessary to best fulfill the objectives of the grantor, while others unknowingly contain
provisions that impede or frustrate those objectives. Finally unanticipated changes in
the law or circumstances that inevitably arise often require the need for flexibility. A
potential solution to these types of situations may be the use of decanting.
Decanting is a statutory process whereby a trustee may modify the terms and
conditions of an irrevocable trust by “pouring over” the assets from one trust to another,
usually having different terms than the initial trust. The resulting change may include
limiting or changing the trust beneficiaries, changing distribution standards, and
extending the length of the trust. The changes permitted will vary according to the
various jurisdictional statutes, and some changes are specifically authorized by statute
while others are not specifically addressed. New York was the first state to adopt a
decanting statute, and currently there are 13 states that have enacted statutes (these
include Alaska, Arizona, Delaware, Florida, Indiana, Missouri, Nevada, New Hampshire,
New York, North Carolina, Ohio, South Dakota and Tennessee).
Decanting statutes have been enacted in response to a need, or perceived need, to
provide flexibility, and again, are just another potential strategy for estate planners to
consider in the design and implementation of trusts.
Statements of Intent
There is no question that throughout the planning process much focus gets placed on
the various strategies and structures available to provide flexibility in trust situations and
mitigate disagreements among beneficiaries and between trustees and beneficiaries.
However, among all these sophisticated planning options, one technique that is often
overlooked is the statement of intent. The statement of intent in its simplest form is a
personalized statement of the grantor’s purpose in establishing the trust which can be
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