In the 1980s, it wasn’t uncommon for individuals to create irrevocable trusts for their children or grandchildren. While irrevocable essentially means unchangeable, Nevada law makes it possible to decant a trust. This means that assets are poured out of the trust and placed into a new revocable trust. Doing so will allow a parent or grandparent to protect a beneficiary who is irresponsible with money or otherwise not fit to receive an inheritance with no strings attached.
Generally speaking, an irrevocable trust cannot be changed after it has been created. However, changes may be possible in the event that the terms of the trust are no longer in the best interest of the creator and beneficiaries. If the state where the trust was created does not allow for decanting, it may be possible to move the trust to another state. This will allow it to be governed by the laws of that state. In addition to Nevada, South Dakota and Delaware have laws favorable for decanting.
Decanting may be beneficial for those who want a trust to hold shares in an S corporation. It can also be beneficial in the event that a person wants to change the term of the trust. Extending the term can provide resources for multiple generations as opposed to just a child or grandchild.
Using a trust as part of an estate plan could provide extra protection for beneficiaries. This may allow them to make better use of their inheritances. For example, they can be limited to using the money to pursue a college degree, pay medical costs or buy a home. An attorney could help create a new trust or help with the decanting process. Legal counsel may also act as a trustee or provide other guidance.