Setting up an irrevocable trust means that once the trust is in place, you cannot alter or abolish it. However, thanks to the state decanting law, you have a way of changing your trust by “decanting” the contents of your trust into a new trust. When you set up a new trust, you can change it so that its terms are different from the old trust.
Not everyone needs to decant a trust. Still, you might find a new trust can benefit your family. You may want to address events that have changed your life and the lives of your children. Kiplinger explains some reasons why you might decide to decant into a new trust.
Extend the life of the trust
Your current trust may only last to the end of the life of your children. If you want to provide assets for your grandchildren, you can create a new trust so that it pays benefits to more than one generation. You may acquire so much in wealth that you decide to set up a dynasty trust that will keep providing for multiple generations.
Add protections for your children
Your children may have grown up since you last created your irrevocable trust, and their life circumstances have you concerned. You may have a son or daughter struggling with debt, a marriage that could crumble, or even substance abuse issues. Your current trust may mandate payments no matter the circumstances. With a new trust like a discretionary trust, you can insist on conditions for payouts that may help your child to avoid losing money to creditors or a divorce.
Provide for a disabled child
In the time since you made the initial trust, you may have had a child born with special needs, or an existing child has suffered an accident that has resulted in a disability. Your current trust might not address special needs or disabilities. To better provide for a disabled child, you can set up a special needs trust and decant your existing trust into it.
If you have created multiple trusts, you might incur costly expenses to pay your trustees as well as taxes on the trusts. You might lower your costs by combining multiple trusts into a single trust. In addition, you can create a new trust that accounts for changes in tax laws, which may help you to save more money.