Trust Decanting Now Authorized by Statute in Utah

Pursuant to S.B. 206 (2025) - Estate Planning Amendments, Utah became the thirty-seventh state to statutorily authorize decanting a trust. Decant means “[t]o distribute (the assets of an irrevocable trust) to the trustee of a new trust with different provisions, often to correct drafting errors or to account for new circumstances.” Utah's decanting statute appears in the Utah Uniform Trust Code, Part 8 - Duties and Power of Trustee, section 75B-2-812.5.

Under this new law, unless the terms of the trust instrument expressly prohibit the trustee from doing so, "the trustee may: (i) distribute part or all of the income or principal to a trust governed by a trust instrument that is separate from the trust instrument of the first trust; or (ii) modify the terms of the trust instrument of the first trust." This assumes that the trustee "has discretion under the terms of a trust instrument to distribute income or principal to, or for the benefit of, a beneficiary of a trust..." and provides twenty days written notice to all of the trust beneficiaries. The trustee must also determine whether distribution or modification is necessary, and the beneficial interests in the trust cannot fundamentally be changed through the decanting.

Various other provisions of Utah Code 75B-2-812.5 restrict a trustee's decanting power (1) if a beneficiary can name themself as trustee or remove and replace the trustee with a related or subordinate party, (2) if the trustee is also a beneficiary, or (3) to protect the integrity of certain types of trusts or gifts to trusts. While decanting a trust was arguably within the trustee's common law power in Utah prior to Utah Code 75B-2-812.5, this statute serves as a valuable clarification and authorization of the decanting power.

Posted in: Irrevocable Trust