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Florida probate and the benefits of trust decanting

Probate administration can include a valuable practice called trust decanting. Estates can include irrevocable trusts, which are set up by a grantor to distribute assets to beneficiaries. A trustee administers the trust for the welfare of the beneficiaries.

An irrevocable trust locks in methods of asset investments and distributions according to the terms of the trust. For example, some irrevocable trusts allow a trustee to distribute funds to pay for college tuition or medical care. Often, upon the grantor's death, the trustee often divides the remaining funds and gives them to the beneficiaries.

Limitations of irrevocable trusts

In the past, even though the intent of the grantor was to protect assets in certain ways, such as provision for tax advantages, changing tax laws and other conditions caused the trust to become less favorable. The permanent nature of the trust meant beneficiaries could lose asset advantages.

Recognizing irrevocable trust limitations, many states, including Florida, have enacted laws allowing the original trust to be "decanted" or poured into a new trust, similar to transferring old liquid into a new bottle while leaving the unwanted sediment behind. The trustee can implement trust decanting without going through a court procedure.

Florida decanting law allows probate flexibility

The benefits of making advantageous changes and pouring an old trust into a new trust have been a great help in preserving wealth for beneficiaries. Some of the reasons to decant an original trust into a new trust include the following:

  • To take advantage of beneficial changes in tax laws
  • To correct legal mistakes and clarify ambiguities in the original trust
  • To make an asset transfer into a special needs trust
  • To change trustee powers
  • To delay or modify distribution if a beneficiary develops a substance abuse problem
  • To allow for marital issues
  • To add a spendthrift provision to prevent creditors from attaching assets before beneficiary distribution

Those who are considering probate planning may want to discuss trust decanting issues with their probate professional regarding an existing trust or the creation of a new trust. Trust decanting is a powerful tool in successful probate planning or modification for Florida residents. 

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