The New Illinois Decanting Statute

Illinois recently enacted Section 16.4 of the Trust andTrustees Act, otherwise known as the Decanting Statute.  Decanting allows for flexibility in the termsof an irrevocable trust by permitting trustees to distribute trust assets fromone trust into another.

The Illinois Decanting Statute will apply “to all trusts inexistence or created after the effective date of the new Act, January 1, 2013.”  Trustees can decant into a new trust withoutthe consent of the settlor, the court, or any of the beneficiaries, as long asthe trustees and one beneficiary give notice to all other beneficiaries andnone of the notified beneficiaries object within 60 days.

The Illinois Decanting Statute forbids certain purposes including the reduction of distributions after they have already comeinto effect, the exoneration of trustees that have failed to exercisereasonable care, the elimination of provisions that remove the trustee, and themodification of perpetuities provisions. Trustees are also subject to certain limitations when decanting if theydo not have absolute discretion over the trust.

See Stephanie Moll& Steve Dawson, How is an Illinois Trust Now Like a Fine Wine?  It Can Be Decanted:  A Summary of the New Illinois Decanting Statute, Bryan Cave Private Client Blog, May 16, 2013.