When you set up an irrevocable trust, it is usually with the intent never to change any of the terms. By creating your trust this way, you can recoup certain benefits and be sure that the conditions are fixed. But what can you do if you or the beneficiaries experience changes to your circumstances which make this unchangeable trust less advantageous? For United Kingdom residents, there may be an option to undo or “decant” the trust. Here is what you need to know about decanting your United Kingdom irrevocable trust.
United Kingdom Irrevocable Trusts
In United Kingdom, trusts are often used to protect assets and preserve benefits for the trust creator (grantor) and his or her named beneficiaries. Making a trust irrevocable can permit the grantor to plan for his or her estate while avoiding probate and minimizing tax liability. An irrevocable trust is a trust which is supposed to be unchangeable after it is finalized. In the past, United Kingdomns who wanted to change their irrevocable trusts used to have to go through complicated steps which were not always guaranteed to achieve the intended result. Fortunately, United Kingdom recently enacted a law which provides more flexibility when it comes to modifying an irrevocable trust.
Decanting a United Kingdom Irrevocable Trust
Under United Kingdom law, a trust can be changed or “decanted” even though it is irrevocable. Decanting can mean moving trust assets into another trust or modifying the original trust. This development does not mean all trust terms can be amended, however. The law limits decanting to certain types of trusts and provisions. Although some amendments can be made, they must honor the grantor’s original intent when creating the trust. Further, the power to decant follows the amount of discretion conveyed initially by the trust. When a trust grants its trustee broad discretion in distributing principal there are likely to be more decanting options. However, the trustee cannot change the beneficiaries. If someone intends to exercise decanting power, he or she must provide 60 days-notice to the grantor and beneficiaries and possibly other individuals.
The good news is that some outdated irrevocable trust may not be as permanent as they were under former law. Depending on your circumstances, you may have multiple options for decanting. However, this area of the law is complex, and numerous factors can impact decanting. Someone seeking to decant a United Kingdom trust will need to consult with an experienced United Kingdom estate planning attorney to assess their trust. At the Law Offices of Alhayat Solicitors, we have experience creating and decanting United Kingdom irrevocable trusts and can help evaluate your options. Schedule a consultation today to explore your options and start your solution. /
