In “When to ‘Decant’ a Trust,” Liz Moyer of the Wall Street Journal describes the uses and advantages of decanting. Ms. Moyer illustrates her points with an anecdote from Joe McDonald, who is an attorney with McDonald & Kanyuk, PLLC, and a founder and director of Concord Trust Company, which is a member of the Trust Council.
Joe McDonald, an estate lawyer at McDonald & Kanyuk in Concord, N.H., says he recently decanted a trust set up 25 years ago by a software executive for his three children. The original trust held $50,000 of shares in the executive’s then-private company. More than a decade after the trust was created, the company had an initial public offering and the value of the trust assets soared to $150 million.
The software executive didn’t want his children to get a big financial windfall at too young an age. The trustee agreed to decant it to a new trust that wouldn’t pay out until the kids were older, Mr. McDonald says.
In her article, Ms. Moyer also describes the advantages of directed trusts. She writes, “some states that allow decanting also permit the trustee’s role to be divided among multiple people, including someone to manage the investments, one to handle payments to the beneficiaries and one to deal with the trust paperwork.” She notes that, in New Hampshire and certain other states, “trustees can move an old trust with one trustee managing all three roles to a new one with split roles where a family member can become the investment manager and keep a tighter rein on the family’s investment holdings.”