What does it mean to decant a trust?
Decanting a trust refers to the legal process of modifying the terms of an existing irrevocable trust by "pouring" its assets into a new trust with different provisions. Much like decanting a bottle of wine, the unwanted terms stay in the old trust while the new version enhances and preserves the grantor’s original intent. South Dakota is known for having favorable trust laws and consistently ranks at the top of the list for having the best decanting statutes in the country, which attract individuals and families looking to establish and manage trusts. Some of the key reasons people consider decanting a trust in South Dakota include:
- Modern Trust Laws: South Dakota has enacted progressive trust legislation, allowing for flexibility and creative estate planning options.
- Asset Protection: South Dakota offers strong asset protection provisions, safeguarding trust assets from creditors and legal claims.
- Dynasty Trusts: The state has no rule against perpetuities, enabling the creation of long-lasting dynasty trusts.
- Directed Trusts: South Dakota permits directed trusts, allowing certain responsibilities to be assigned to third-party advisors or co-trustees.
- No State Income Tax: South Dakota does not impose state income tax on trusts, making it an attractive option for high-net-worth individuals.
- Privacy: South Dakota allows trusts to be created without filing with the court or making the document publicly available.
- Correcting Ambiguities: Decanting into a new trust can correct ambiguities and correct drafting errors.
Decanting is a complex legal action that requires the expertise of an attorney who is familiar with trust laws in South Dakota. If you are considering decanting a trust in South Dakota, please reach out to Legacy Law Firm, PC. We will be able to guide you through the process to ensure it is done in compliance with applicable laws and meet your specific goals and needs.