Monday, August 19, 2013
Decanting is the process of distributing trust property to another trust pursuant to a trustee’s discretionary authority.
In Morse v. Kraft, the Massachusetts Supreme Court recently authorized the practice of decanting without the consent or approval of a court or beneficiary. This case involved a 1982 Trust created by Robert and Myra Craft and four separate subtrusts benefitting their four sons. In 2012, the sole trustee, Richard Morse, was nearing retirement and wished to transfer the subtrust property into new subtrusts allowing for the sons to manage the assets of the subtrusts.
The court decided to follow the terms of the trust agreement. Because the trust granted Morse unlimited discretion in making outright distributions to beneficiaries, it also allowed him to make outright distributions in further trusts. This broad grant of unlimited discretion evidenced the settlor’s intent to give the trustee authority to decant without beneficiary consent, court approval, or authorization by statutory law.
See William Linkous & Tiffany McKenzie, Massachusetts Supreme Court Approves Decanting in Kraft Family Trust, Bryan Cave Fiduciary Litigation, Aug. 19, 2013.