When most people hear the term “irrevocable trust,” they assume it’s completely set in stone. For the most part, that is true. These trusts are generally created to be permanent, but what happens when life changes in unexpected ways?
Texas law provides a creative legal tool known as “decanting,” which allows certain modifications to an irrevocable trust even if the original trust document says otherwise. We will explore what it really means for a trust to be irrevocable, explain the decanting process, describe common reasons it may be used, and outline how it works here in Texas.
What Does “Irrevocable” Really Mean?
An irrevocable trust is a trust that, once created and funded, generally cannot be changed, amended, or revoked by the person who set it up. People often choose irrevocable trusts for important reasons:
- Asset protection to shield assets from creditors
- Tax planning to reduce estate taxes or gift taxes
- Medicaid planning to help qualify for long-term care benefits without spending down all assets
The permanent nature of an irrevocable trust is part of what makes it powerful. However, life is rarely predictable. Family circumstances change, laws evolve, and sometimes the original trust no longer serves its intended purpose—creating a need for flexibility.
What Is the Decanting Process?
Decanting is a legal process that allows the trustee of an existing irrevocable trust to “pour” assets from that trust into a new trust with different terms. Think of it like decanting wine: you move the contents to a new vessel while keeping the substance itself.
Importantly, decanting doesn’t always mean rewriting the entire trust. Instead, it often focuses on:
- Fixing outdated or unclear provisions
- Adjusting trust terms to reflect changes in law or family needs
- Adding protections that weren’t included originally
This process can help keep the trust effective and relevant without going through a costly court modification.
Situations Where Decanting May Be Appropriate
Decanting can be useful in a range of circumstances, including:
- Significant family changes such as births, deaths, divorce, or remarriage
- The need to add or remove a trustee or trust protector
- Clarifying vague language or correcting drafting errors that cause confusion
- Responding to changes in tax laws or state statutes that affect the trust’s administration
- Protecting a beneficiary who now has special needs to ensure continued eligibility for benefits
By carefully using decanting, families can adapt their estate plans to changing realities.
How Decanting Works in Texas
Texas law recognizes and governs trust decanting, but the process is highly technical. Here’s a broad overview:
- Who can initiate decanting? Generally, it’s the trustee—not the grantor or beneficiaries—who has the authority to decant, provided the trust’s terms and state law allow it.
- Legal requirements: The trustee must follow specific procedures, including giving notice to beneficiaries and ensuring the decanting complies with statutory rules.
- Safeguards: The process is designed to protect beneficiaries by preventing decanting from stripping away certain core rights or drastically altering the trust’s intent.
Because decanting can significantly affect family wealth and beneficiary rights, it’s crucial to work with an experienced estate planning attorney familiar with Texas law to determine if it’s appropriate and how best to proceed.
Conclusion & Call to Action
While irrevocable trusts are meant to provide certainty and asset protection, the decanting process offers a thoughtful, legal way to adjust them when life changes. If you’re concerned your family’s irrevocable trust no longer fits your needs, decanting might be an option.
Attorney Marla Mundheim and The Mundheim Firm can help you evaluate your trust and explain whether decanting or other strategies make sense for your situation. Contact us at 817-479-0076 or reach out through our online contact form to schedule a consultation and review your trust documents today.
