People who create an estate plan have several options that they can use to pass assets to their beneficiaries. One of these is to set up trusts and fund them so the trustee of the trust can pass the assets to the beneficiaries.
Some trusts are irrevocable, which means they can’t be changed or canceled once they’re established. The exception to this is if all beneficiaries or the court approve the changes, but that’s not always possible, even if changes need to be made.
Trust decanting is allowed under Texas law
There are certain circumstances that will allow the trustee to decant the trust, which is the process of transferring assets from an existing irrevocable trust into a new trust. Texas Property Code, Sections 112.071 through 112.087 set the procedures and guidelines for making this major change to the irrevocable trust.
In order to decant a trust, the trustee must act in good faith and in accordance with the terms that were set in the original trust. The new trust can include provisions that weren’t included in the original trust. These are often helpful when the original trust has language that’s outdated or that doesn’t contain provisions that protect the interests of the beneficiaries.
It’s critical that anyone who’s considering this as an option to correct an irrevocable trust understands the specifics of how this will work. It may be beneficial to have someone on their side who’s familiar with this so they can complete the process properly and with minimal stress.