In life, things change. The reasons for doing something 20 years ago may no longer exist. This is one of the inherent problems in estate planning as a client and their estate planning attorney attempt to project investment needs, personal budgets and business plans far into the future. People in Florida may have created irrevocable trusts many years ago for solid and valid reasons, but life might have changed to the extent that the trust provisions are burdensome.
Florida and other states are now permitting trust owners to decant certain irrevocable trusts in what is being referred to as a “Do Over Trust.” In the provision, a trustee can move the corpus or assets of the trust to another with less burdensome terms that are more favorable provisions. Only certain trustees are permitted to do so.
There are many provisions to the decanted trust statute, but a few highlights and limits are worth mentioning. First, the trustee must have the power to invade the principal of the original trust. Second, if the trust was created to take advantage of a federal tax break, such as a charitable or marital deduction, it cannot be decanted. Third, all qualified beneficiaries of the first trust, plus all trustees and owners of the first trust, must be given 60 days prior notice of the planned change. Notice provisions are quite in depth and detailed.
For those who have created an irrevocable trust that no longer makes much economic sense, a meeting with an experienced estate planning attorney may be helpful. As the statute is very detailed, it can be very easy for the layman to miss a mandatory provision. With an attorney familiar with the provisions of the Trust Code, the outdated previous trust may be replaced with one that meets current needs.
Source: Florida Statutes and Constitution, Florida Trust Code, 736.04117.