Decanting is the act of distributing the assets of an old trust to a new one with more favorable terms.  It provides an easy, inexpensive method of correcting errors or ambiguities, adapting a trust to changes in a settlor’s objectives or changes in a beneficiary’s circumstances, taking advantage of new planning opportunities or adding flexibility to a trust.

The TCJA greatly expanded decanting opportunities by doubling the gift and estate tax exemption(s).  For the next eight years we have a tremendous opportunity to help clients with a number of selective decanting opportunities including adding a GPA to obtain a step-up, decanting from a grantor to non-grantor trust, accelerating  grandchildren and future generations (under the law for four states), enhancing asset protection and more.

However, because trust decanting is a relatively new estate planning strategy, its tax consequences have not yet been clearly established.  This fast-paced course will cover some of the critical income tax, gift and estate tax, and GST tax issues including:

• How the TCJA impacts decanting
• Gain recognition by the transferor trust where the decant is from non-grantor trust to non-grantor trust, grantor trust to non-grantor trust and grantor trust to grantor trust
• GST issues with grandfathered trusts, exempt trusts and nonexempt trusts
• Whether a decanting distribution results in gain recognition by trust beneficiaries under IRC § 1001
• Changing grantor trust status
• Whether a distribution of property from one trust to another is treated as a distribution for purposes of IRC §§ 661 and 662
• What impact does decanting have on the original trust's tax attributes?
• Does a decanting power prevent a trust from qualifying as a QSST?
• What are the "negative basis" implications?
• Whether a beneficiary whose interests in a trust are reduced by decanting makes a taxable gift
• Adding limited and general powers of appointment
• Whether decanting results in gift tax for a trustee or a trust beneficiary
• Whether a beneficiary whose interests in a trust are reduced by decanting makes an IRC § 2036 or § 2038 transfer
• Changing distribution standards
• Whether a GST grandfathered trust that receives decanted property loses its grandfathered trust status
• Whether decanted property has the same GST inclusion ratio in the transferee trust that it had in the transferor trust

 

 

There will be no CE for this webinar


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