Article on Decanting and Revocability in Irrevocable Texas Trusts

Crystal Rose (J.D. Candidate, Texas Tech University School of Law, May 2015) recently published an article entitled, Decanting More Than Just Wine: Revocability in Irrevocable Texas Trusts, 7 Est. Plan. & Community Prop. L.J. 385 (Fall 2014). Provided below is an excerpt from the introduction of the article: 

The process of decanting wine is based on the need to filter the sediments out of an otherwise decadent bottle of wine, as many wines produce a significant amount of sediment as they age. Decanting a bottle of wine allows removal of these sediments while keeping the flavor and texture of the wine intact. Decanting a bottle of wine also allows it to breathe, bringing life to an older, sophisticated wine. To decant, one pours wine from the bottle into a decanter–a container with a special design that allows the wine to separate from the sediment. Aerating a bottle of wine–the act of pouring the wine into a decanter–also stimulates the oxidation process, allowing the flavor of the wine to develop and increasing the desirability of the wine. Decanting not only allows the flavor to develop, but may also smooth or soften some of the harshness that comes with some wines.

Similarly, decanting  trust allows a trustee to pour assets from one trust into another, often for the purpose of breathing new life into a previous irrevocable trust. Decanting can be used to remove sediment–tax problems or old laws that were useful when the settlor first created the original trust but are no longer beneficial–while keeping the purpose of the trust intact. More and more, the term “irrevocable” in a trust context does not mean the trust absolutely cannot be changed. Instead, concepts such as decanting greatly increase the flexibility of all trusts, including so-called irrevocable trusts.

While several states have previously enacted decanting statutes, Texas only recently enacted this kind of statute. . . .

This comment will address the history of decanting a trust as well as Texas’s new decanting statute. First, background information will be presented in order to develop a strong foundation as to what an irrevocable trust is, how to create one, and what flexibility, if any, the trustee or beneficiaries have in administering an irrevocable trust. Next, an overview of modification and termination of a trust will demonstrate how a settlor, trustee, or beneficiary can officially modify a trust. Then, an exploration of decanting on other states, as well as common law, will show the history and rationale behind decanting. Finally, a discussion of the practicality of the Texas statute will follow.