Category: Asset Protection



North Carolina Ranks in Top 15 for Trust Decanting

Posted on: January 22nd, 2014
Attorney Steven J. Oshins, the force behind the annual Domestic Asset Protection Trust and Dynasty Trust Rankings, released the inaugural Trust Decanting Rankings Chart. The chart was developed to show how the flexibility of decanting statutes compare on a state-by-state basis.
 
North Carolina was in a triple tie for the #14 spot, sharing the position with Kentucky and Texas. North Carolina’s trust decanting statutes were updated last year when Senate Bill 279 was passed into law. The changes provided added protection of beneficiaries’ interests and presented defined descriptions of the permissible period allowed for the suspension of the power of alienation of the original trust when a beneficiary of the new trust is granted a power of appointment, as well as an updated definition for exercising the power to appoint principal or income.
 
Clients’ decanting goals vary. The chart shows where some states have greater flexibility in some areas, but weaker in other areas. When it comes to amending an irrevocable trust, the restrictions in some states may make them less attractive for a particular client’s needs. The statutes that govern revising an irrevocable trust in North Carolina may rank #14 nationally, but depending on how a client desires to amend the trust, North Carolina’s statutes may not allow the desired change.
 
Some trusts contain an ascertainable standard that governs when distributions to beneficiaries may be made. In North Carolina, a trust with an ascertainable standard can be decanted, but the ascertainable standard must follow to the new trust; that is, a trustee cannot decant from a trust with an ascertainable standard to a discretionary trust.

Is decanting a confidential process? Will beneficiaries of the original trust learn that the provisions of the trust were amended? In North Carolina, beneficiary notifications are required.
 
Although our estate planning law firm is headquartered in Chapel Hill, our attorneys also handle estate planning and asset protection matters in Tennessee, New York, and Florida. All four of the states our attorneys serve are part of the 22 states that offer trust decanting.
 
How did the states we serve rank?
 
1. Tennessee (Ranked #5 Nationally.)
2. North Carolina (Tied for #14 Nationally.)
3. New York (#19 Nationally.)
4. Florida (#21 Nationally.)

 

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