Estate size this page covers: any irrevocable trust. The tax sections matter most for trusts holding $15 million or more, for GST-exempt and dynasty trusts, and for any trust with a California trustee or California beneficiaries. Larger plans are covered on the ultra high net worth estate planning page.
Short answer: A California trustee who has discretion to distribute principal can move an irrevocable trust into a new trust under the Uniform Trust Decanting Act, Prob. Code §§ 19501 to 19530. No beneficiary consent and no court order are required, but the trustee has to give 60 days’ written notice first, and the new trust can’t take away a vested interest, shrink a charitable interest, or break a tax benefit the old trust was built to get. The federal tax answer is still open: the IRS asked for comments in 2011, and in 2026 it still won’t ordinarily rule on a decanting that changes who benefits.
Trust decanting lets a California trustee “pour” the assets of an existing irrevocable trust into a new trust with updated, often more favorable terms, using authority the trustee already holds instead of going through a full court petition. California formalized this practice through the Uniform Trust Decanting Act, at Probate Code §§ 19501 through 19530. It’s a real tool, not a loophole, and it comes with real limits.
If you’re a trustee sitting on an outdated trust document, decanting might be your fastest fix. Whether it actually applies to your situation depends on exactly how much discretion the original trust gives you.
What decanting actually does
Decanting doesn’t let a trustee override a settlor’s core intent. It’s a mechanism for a trustee who already holds discretionary distribution authority to exercise that authority in a specific way: by distributing trust property into a new trust rather than directly to a beneficiary. The new trust can update administrative provisions, clarify language that’s become ambiguous over time, add trustee succession terms, or adjust distribution standards, all within limits set by statute.
Think of it less as rewriting the trust and more as exercising a distribution power the trustee was already given, just aimed at a new container instead of an individual’s pocket.
When decanting is actually available
California’s decanting statute splits trustee authority into two tiers, and which tier you’re in determines how much you can actually change.
Expanded discretion gives you real latitude
If the trustee has “expanded discretion,” meaning distribution authority that isn’t limited to an ascertainable standard like health, education, maintenance, and support, the trustee has significant room under Probate Code § 19511 to decant into a new trust. That can include adjusting beneficial interests in some respects, though always subject to statutory limits that protect beneficiaries’ vested rights. This is the broader of the two categories, and it’s where decanting does the most work.
Limited discretion narrows what you can change
If the trustee’s discretion is tied to an ascertainable standard, decanting authority under § 19512 is narrower. You can still decant, but the new trust generally has to preserve the same distribution standard for each beneficiary that existed in the old one. This exists specifically to stop a trustee from using decanting to quietly disinherit one beneficiary or favor another.
| Expanded discretion | Limited discretion | |
|---|---|---|
| Distribution authority | Not limited to an ascertainable standard such as health, education, maintenance, and support | Tied to an ascertainable standard |
| Statute cited | Prob. Code § 19511 | Prob. Code § 19512 |
| What you can change | Significant room, including adjusting beneficial interests in some respects, within limits that protect vested rights | Narrower: the new trust generally has to preserve the same distribution standard for each beneficiary |
Who can decant, and over what
The statute gives the decanting power to an “authorized fiduciary,” which means a trustee or other fiduciary, other than a settlor, who has discretion to distribute principal to one or more current beneficiaries (Prob. Code § 19502, subd. (c)). Discretion over income alone isn’t enough, except in the special needs case under Prob. Code § 19513. The person who created the trust can’t decant it.
The two tiers in the table above come from the definitions. “Expanded distributive discretion” is a power over principal that isn’t limited to an ascertainable standard or a reasonably definite standard (§ 19502, subd. (k)). “Limited distributive discretion” is one that is (§ 19512, subd. (a)). A trustee who can pay principal “for health, education, maintenance and support” is in the limited tier.
The act reaches an express trust that is irrevocable, or revocable only with the trustee’s consent or the consent of someone with an adverse interest (Prob. Code § 19503, subd. (a)). It doesn’t reach a trust held only for charitable purposes (§ 19503, subd. (b)). It applies when the trust is administered in California or says California law governs its administration or construction (Prob. Code § 19505).
A trust can shut the door. If the document expressly prohibits decanting, or prohibits a state-law power to distribute principal to another trust, the trustee can’t decant (Prob. Code § 19515, subd. (a)). A spendthrift clause or a general “this trust is irrevocable and can’t be amended” clause doesn’t count as a prohibition (§ 19515, subd. (c)).
What the new trust can’t do
The limits are where most decantings succeed or fail. For a trustee in the expanded tier, Prob. Code § 19511, subdivision (c) says the second trust may not:
- add a current beneficiary who isn’t a current beneficiary of the first trust.
- add a remainder or successor beneficiary who isn’t already a beneficiary of the first trust.
- reduce or eliminate a vested interest.
“Vested interest” has a specific meaning (§ 19511, subd. (a)(4)). It covers a noncontingent right to a mandatory distribution, a current right to income, a fixed dollar amount or a percentage paid at least once a year, a current withdrawal right of the same kind, a presently exercisable general power of appointment, and a right to a fixed share at termination that no one’s discretion can take away. A purely discretionary interest isn’t vested. So a trustee in the expanded tier can rearrange discretionary shares, and the fiduciary duties below decide whether it should.
The expanded tier can also give a current beneficiary a new power of appointment, general or limited, and the class of people the power can benefit may be broader than the original beneficiaries (§ 19511, subds. (d)(3), (e)). A new power of appointment is often the cleanest way to add flexibility without adding a beneficiary directly.
Every decanting, in either tier, runs into these further limits:
- Charitable interests. The second trust can’t diminish a charitable interest, alter a charitable purpose, or change a condition attached to it. If the charitable interest is a fixed, unconditional right, the Attorney General has the rights of a qualified beneficiary and the charitable share stays under California law unless the Attorney General consents or doesn’t object in writing within the notice period, or a court approves (Prob. Code § 19514).
- Tax benefits. Prob. Code § 19519 keeps the second trust from undoing a marital deduction, a charitable deduction, the gift tax annual exclusion, S corporation eligibility, a zero GST inclusion ratio under IRC § 2642(c), or retirement-plan payout treatment the first trust qualified for. It also bars losing any other tax benefit when the first trust expressly states an intent to qualify for it or was clearly designed to qualify.
- Grantor trust status. The second trust may switch between grantor and nongrantor status in either direction (§ 19519, subd. (b)(9)), but the settlor can block certain switches by objecting in a signed writing within the notice period (§ 19519, subd. (b)(10)).
- Trustee pay and protection. The trustee can’t use a decanting to raise its own compensation without consent of all qualified beneficiaries of the second trust or a court order (Prob. Code § 19516), and the second trust can’t relieve the trustee of liability more than the first trust did (Prob. Code § 19517).
- Removal powers. A decanting can’t change someone else’s power to remove or replace the trustee unless that person consents or a court approves a substantially similar power (Prob. Code § 19518).
- Perpetuities. The second trust can last a different length of time, but property that came from the first trust stays subject to the first trust’s perpetuities rules (Prob. Code § 19520, subd. (b)).
- Creditors. A debt enforceable against the first trust’s property is enforceable to the same extent after the move (Prob. Code § 19527).
If the second trust gets something wrong, the statute saves the decanting and fixes the document: a provision the act doesn’t permit is void to the extent necessary, and a required provision is read in (Prob. Code § 19522).
How the notice works
The notice goes out at least 60 days before the decanting
The trustee sends it to each living settlor, each qualified beneficiary, anyone holding a presently exercisable power of appointment, anyone who can remove or replace the trustee, every other fiduciary of the first trust, every fiduciary of the second trust, and the Attorney General when a determinable charitable interest is involved (Prob. Code § 19507, subd. (c)). Minors and unborn beneficiaries with no representative get notice through a guardian ad litem, and the trustee has to ask the court to appoint one if none exists (§ 19507, subd. (d)).
The notice has required contents
It has to describe the decanting, give the trustee’s reasons, explain how the trusts differ, state the proposed effective date, and attach copies of the old and new trust instruments. It must also carry a bold-type warning that a person who doesn’t bring a court action within 59 days loses the right to contest the decanting (§ 19507, subd. (g)).
Everyone can waive the waiting period
If every person entitled to notice signs a waiver, the trustee doesn’t have to wait out the 60 days (§ 19507, subd. (h)).
The trustee signs a written exercise
The decanting is made by a signed writing that identifies both trusts and the property moving to each (Prob. Code § 19510).
A court can still be asked
The trustee, a beneficiary, or anyone entitled to notice can petition for instructions, for approval, or for a ruling that the decanting is ineffective or an abuse of discretion (Prob. Code § 19509). In that proceeding the trustee carries the burden of proving notice was given and the power exists (§ 19509, subd. (b)).
Tax consequences of decanting
As of October 2026, no regulation or revenue ruling settles how decanting is taxed. In Notice 2011-101 the Treasury and the IRS asked for public comments on the income, gift, estate and GST tax effects of decanting that changes beneficial interests, and listed 13 facts that might matter, from grantor trust status to a change in situs that extends the trust’s termination date. Comments were due April 25, 2012. In Rev. Proc. 2026-3, the IRS still lists, among areas where it will not ordinarily issue letter rulings, whether a decanting that changes beneficial interests is a gift under IRC § 2501, a distribution under IRC §§ 661 and 662, or a loss of GST-exempt status (§ 4.01(37), (55), (61)).
Gift tax when a beneficiary consents or stays silent
The gift tax reaches any transaction in which an interest in property is gratuitously passed to another, whatever the means (Treas. Reg. § 25.2511-1, subd. (c)(1)). In Chief Counsel Advice 202352018, released December 29, 2023, the IRS Office of Chief Counsel concluded that beneficiaries who consented to a court modification adding a discretionary power to reimburse the grantor’s income taxes made a taxable gift, because they gave up part of their interest. The memo says the result would be the same under a state statute that gives beneficiaries notice and a right to object and a beneficiary fails to object. California’s decanting statute is that kind of statute. Chief Counsel advice can’t be cited as precedent, but it shows where the IRS stands.
The practical risk is highest when a beneficiary is also the trustee, or when the decanting shifts value away from a beneficiary who signs a consent or waiver. Before a decanting or court modification that moves value between generations or lets the trustee pay the settlor, I’d want the beneficiaries’ gift exposure computed and, where it’s real, a Form 709 discussion with the CPA.
GST tax: grandfathered trusts have a narrow safe harbor
A trust that was irrevocable on September 25, 1985 is outside the generation-skipping transfer tax (Treas. Reg. § 26.2601-1, subd. (b)(1)(i)). The regulation keeps that status after a distribution to a new trust only if either the trust document authorized it without beneficiary or court approval, or state law authorized it at the time the trust became irrevocable, and the new trust doesn’t extend vesting beyond the original perpetuities period (subd. (b)(4)(i)(A)). California’s decanting statute took effect in 2019, so it can’t be the state-law authority for a trust that became irrevocable before 1985. Those trusts need authority in the document itself, or have to fit the regulation’s separate test for modifications that don’t shift a beneficial interest to a lower generation or extend vesting (subd. (b)(4)(i)(D)).
For trusts that are GST-exempt because exemption was allocated to them, the regulation’s safe harbors don’t speak directly, and the IRS won’t ordinarily rule (Rev. Proc. 2026-3, § 4.01(61)). I draft those decantings to stay inside the same two limits anyway: no shift to a lower generation and no longer vesting period.
Income tax: grantor status and distributions
A decanting can turn a grantor trust into a nongrantor trust or the reverse (Prob. Code § 19519, subd. (b)(9)), and that changes who pays the income tax. Whether the transfer itself carries out distributable net income to the new trust is one of the open questions in Rev. Proc. 2026-3, § 4.01(37). A decanting that moves a trust holding appreciated property or a partnership interest needs the CPA’s review before the notice goes out.
Decanting to change situs, and the California income tax
Under both tiers the second trust may be created or administered under the law of any jurisdiction (Prob. Code §§ 19511, subd. (d), 19512, subd. (c)). Families often ask whether that means a decanting can move a trust to Nevada and out of California’s income tax. Sometimes it helps. Often it doesn’t.
California taxes a trust’s entire taxable income if a fiduciary or a beneficiary whose interest isn’t contingent is a California resident (Rev. & Tax. Code § 17742, subd. (a)). With more than one trustee, the income is apportioned by the number of California-resident trustees (Rev. & Tax. Code § 17743), and with more than one beneficiary, by the number and interests of resident noncontingent beneficiaries (Rev. & Tax. Code § 17744). Income that was never taxed because a California beneficiary’s interest was contingent becomes taxable to that beneficiary when it’s distributed, computed as if it had been received over up to six years (Rev. & Tax. Code § 17745, subds. (b), (d)).
And California-source income is taxed no matter where the trustee lives. In Steuer v. Franchise Tax Bd. (2020) 51 Cal.App.5th 417, a trust with one California trustee and one Maryland trustee claimed it owed tax on only half of a capital gain from a California business. The Court of Appeal held that the entire California-source income was taxable regardless of the trustees’ residence, and separately affirmed that the beneficiary’s discretionary interest was contingent. The trust taxation details are on the Nevada trust and California taxes page.
Two more limits travel with the trust. Property from the first trust keeps the first trust’s perpetuities period (§ 19520, subd. (b)), so moving to a state with a longer one doesn’t extend it. And a determinable charitable interest stays under California law unless the Attorney General agrees or doesn’t object (§ 19514, subd. (e)).
Worked example: decanting to a Nevada trustee
Hypothetical, for illustration only. A $20 million irrevocable trust created by a California couple in 2012 is fully discretionary for their three children, all California residents. Both trustees live in California. The trust realizes and keeps $500,000 of capital gain in a year. The trustees consider decanting into a Nevada-administered trust with a Nevada trust company as trustee. The chart shows how much of that $500,000 California taxes the trust on that year in four setups. It shows taxable income, not tax, so it doesn’t depend on the bracket.
| Setup | Taxable in California each year | Why |
|---|---|---|
| A. Two California trustees | $500,000 | Fiduciary is a resident, Rev. & Tax. Code § 17742 |
| B. One California, one Nevada trustee | $250,000 | Apportioned by resident trustees, § 17743 (non-California-source gain) |
| C. Nevada trustee only | $0 now | Beneficiaries’ interests are contingent. Taxed to a California beneficiary when distributed, § 17745(b) |
| D. Nevada trustee, California-source gain | $500,000 | California-source income is taxed regardless of trustee residence, Steuer |
Setup C looks like the win, and for gain from out-of-state sources it can defer California tax. It isn’t permanent. When the trustee later distributes that accumulated gain to a child who lives in California, the child is taxed on it under § 17745(b). If the trust holds California real estate or a California business, setup D is the honest picture: decanting changed the trustee and nothing else.
Decision flow: whether to decant
1. Confirm the trust is irrevocable and under California law
If it isn’t, look to the governing state’s statute or to a petition. If it is, continue.
2. Confirm the trustee has discretion over principal
No discretion over principal means no decanting power, except the special needs route in § 19513. Use a petition under §§ 15403 to 15404 or a reformation petition instead.
3. Check for an express prohibition
If the document expressly prohibits decanting, stop (§ 19515, subd. (a)). A spendthrift clause alone isn’t a prohibition.
4. Test the change against vested, charitable and tax-benefit limits
If it would reduce a vested interest, diminish a charity, or break a deduction or exclusion, the statute bars it. Redesign the change or petition the court.
5. Run the tax review for GST status and California beneficiaries
Run the GST, gift and California income tax analysis above before drafting, with the CPA at the table.
6. Weigh the risk of an objection
If a beneficiary is likely to object, consider asking the court to approve the decanting under § 19509 instead of relying on the 59-day bar. A decanting that cuts someone out invites the claim that lost in Hodges.
7. Send the notice, wait out the period, sign the exercise
Keep the written record of why the decanting serves the trust’s purposes and how each beneficiary’s interests were considered.
Cases won and lost
As of October 2026, I haven’t found a published California appellate decision construing the Uniform Trust Decanting Act. The California opinions that mention it so far are unpublished. The leading cases come from other states, and they turn on the same fiduciary duties California imposes (Prob. Code § 19504, subd. (a)).
| Case | What happened | Result |
|---|---|---|
| Hodges v. Johnson (N.H. 2017) 177 A.3d 86 | Trustees decanted family-business trusts three times and eliminated the future interests of several beneficiaries. The decanting trustee admitted he never gave their financial interests any consideration. | Decanting lost. The New Hampshire Supreme Court affirmed an order voiding the decantings for breach of the duty of impartiality and removing two co-trustees. |
| Ferri v. Powell-Ferri (Mass. 2017) 476 Mass. 651 | During the beneficiary’s divorce, trustees decanted a Massachusetts trust into a new spendthrift trust without telling him, out of concern his wife would reach the assets. | Decanting won. Answering certified questions, the Massachusetts high court held the trust’s terms authorized the decanting. A concurrence noted the court didn’t decide whether decanting solely to defeat a spouse’s claim violates public policy. |
| Steuer v. Franchise Tax Bd. (2020) 51 Cal.App.5th 417 | A trust with one California and one Maryland trustee claimed it owed California tax on half of a California-source gain. | Trust lost on the tax. All California-source income is taxable regardless of trustee residence. The court affirmed that the beneficiary’s interest was contingent. |
What changes in California
- A 59-day contest bar. The notice must warn in bold type that anyone who doesn’t sue within 59 days loses the right to contest the decanting (Prob. Code § 19507, subd. (g)(5)). A petition claiming the decanting didn’t comply with the act or was an abuse of discretion stays available (§ 19507, subd. (i)).
- Income tax follows the people. Moving the trust’s situs doesn’t change Rev. & Tax. Code § 17742: a California trustee or noncontingent California beneficiary keeps the trust taxable here, and California-source income stays taxable after Steuer.
- Throwback on distribution. Gain accumulated for a contingent California beneficiary is taxed when distributed, spread over up to six years (Rev. & Tax. Code § 17745).
- Charities stay home. A determinable charitable interest stays under California law and the Attorney General has a beneficiary’s rights (Prob. Code § 19514).
- The settlor is still the settlor. For California law outside the act, the settlor of the first trust is deemed the settlor of the second (Prob. Code § 19525).
- Court petitions remain open. The act doesn’t limit a petition for instructions or a petition to modify (Prob. Code § 19529).
What works and what fails
| Decanting to… | Result | Why |
|---|---|---|
| Modernize administrative and investment provisions | Works | The core use, with no change to beneficial interests |
| Add a spendthrift clause or split a trust in two | Works | Permitted, and a spendthrift clause doesn’t block decanting, § 19515(c) |
| Give a current beneficiary a power of appointment | Works in the expanded tier | § 19511(d)(3), (e) |
| Move administration to another state | Works for administration | Perpetuities period and California tax ties stay, §§ 19520(b), 17742 |
| Cut a mandatory income or unitrust interest | Fails | Vested interest, § 19511(c)(3) |
| Add a new beneficiary | Fails | § 19511(c)(1), (2) |
| Eliminate a discretionary beneficiary out of family friction | High risk | The statute may permit it. Fiduciary duty may not, Hodges |
| Add a power to reimburse the settlor’s income tax | Likely barred by decanting | Makes the settlor a new current beneficiary, § 19511(c)(1), unless the first trust already allowed it. Usually done by court petition, and Chief Counsel Advice 202352018 treats the beneficiaries’ consent as a gift |
| Raise the trustee’s own fee | Fails without consent or court order | § 19516 |
| Reduce a charity’s share | Fails | § 19514(c) |
Don’t do this: decant a beneficiary out of a trust because the family is fighting, with nothing in the file showing you weighed that beneficiary’s interests. The same kind of record lost in Hodges v. Johnson (N.H. 2017) 177 A.3d 86, where the decantings were voided and the trustees were removed. And don’t assume a beneficiary’s silence after notice is tax-neutral: the IRS’s position in Chief Counsel Advice 202352018 is that a beneficiary who lets a value-shifting change go through without objecting can be making a gift.
Common reasons trustees decant
Decanting tends to solve a specific, practical set of problems rather than being a general-purpose overhaul tool. The situations that come up most often:
- Correcting drafting errors that create ambiguity or unintended tax consequences
- Updating trustee succession provisions when the originally named trustees are no longer available or willing to serve
- Adding spendthrift protections that were left out of the original document
- Consolidating or splitting trusts for administrative efficiency
- Adjusting to new tax law, particularly around basis planning, which overlaps with trust reformation for tax purposes
- Modernizing outdated administrative provisions, like investment authority or trustee compensation clauses
Decanting versus a court petition
Decanting is usually faster and cheaper than a formal petition to modify a trust under Probate Code §§ 15403-15404, largely because it doesn’t always require going in front of a judge first. But “doesn’t always require” isn’t the same as “never appropriate to seek.” If beneficiaries are likely to object, if the change touches vested beneficial interests in a meaningful way, or if the trustee’s own discretion under the original trust is ambiguous, a court petition is often the safer, more defensible path. We walk through that process in our article on petitioning to modify an irrevocable trust under §§ 15403-15404.
Trustees also need to know that decanting still requires notice to beneficiaries under § 19507, and beneficiaries have the right to object once notified. A decanting that proceeds over a legitimate objection without solid justification can expose the trustee to a later challenge, potentially even a removal petition if beneficiaries believe the trustee overstepped.
Fiduciary duties don’t take a break during decanting
Decanting is an exercise of fiduciary discretion, not a unilateral escape hatch from an inconvenient trust. A trustee considering it still has to act consistently with ordinary trustee duties, including loyalty to all beneficiaries, not just the one who happened to ask for the change. Decanting to benefit one beneficiary at another’s expense, without solid statutory grounding, is an invitation to litigation.
If beneficiaries believe a decanting was improper, or that it was used to smuggle in a change the settlor never would have wanted, that dispute can turn into a full trust contest over the validity of the new trust instrument itself.
Practical steps before you decant
- Confirm exactly what level of discretion the trustee actually holds under the original trust instrument. This is the threshold question and it’s often less obvious than it looks on a first read.
- Draft the new trust carefully, mirroring the protections the statute requires for beneficiaries.
- Provide proper notice to all beneficiaries and qualified persons entitled to it under § 19507.
- Document the reasoning behind the decanting decision in writing, in case it’s questioned later.
- Consider the tax consequences before finalizing new terms, especially for an irrevocable trust holding appreciated assets.
Where decanting won’t help
Decanting works best when the fix needed is administrative or technical, not when the real dispute is about who gets what. If your beneficiaries fundamentally disagree about the outcome, decanting won’t paper over that disagreement, it’ll usually just relocate the fight to a courtroom after the fact instead of before. And if your discretion under the original trust is ambiguous, decanting without resolving that ambiguity first is how trustees end up personally exposed. This is a tool for a trustee who knows exactly what authority they’re working with, not a shortcut around a hard family conversation.
Talk to a real California estate attorney
If you’re a trustee looking at a trust document that no longer fits the family it’s supposed to serve, I can tell you whether decanting is actually available to you, how much room your discretion gives you, and whether a court petition would be the safer route instead.
Talk to Eric Ridley is a free 30-minute consultation by phone or Zoom, anywhere in California. Or call (805) 244-5291.
Related reading: Can a trust be modified after death in California · Petitioning to modify an irrevocable trust under §§ 15403-15404 · Reforming a trust for tax purposes · Changing an irrevocable trust in California
Working with Ridley Law
Decanting is a trustee’s decision with a beneficiary’s lawsuit attached, so I start by reading the trust and mapping who gets notice and what the tax exposure is before anyone drafts a second trust. The first call is free and runs 30 minutes, by phone or Zoom. I work alongside your CPA and, where the matter calls for it, co-counsel. Work at this level is built for each family and quoted in writing before any drafting starts.
Book my 30-minute call or call 805-244-5291.
Frequently asked questions
What is trust decanting and when can a California trustee use it?
Trust decanting lets a trustee with discretionary distribution authority pour the assets of an old irrevocable trust into a new trust with updated terms, instead of distributing directly to beneficiaries. California authorized this under the Uniform Trust Decanting Act, Probate Code §§ 19501 and following. It works best for fixing drafting errors, updating trustee provisions, or adding protections the original trust lacked.
Does decanting a trust require court approval?
Not always. Decanting is designed to work without a court petition in many cases, which is what makes it faster and cheaper than a formal modification. But if beneficiaries are likely to object, or the change affects vested beneficial interests significantly, a court petition is often the more defensible route instead.
What is the difference between expanded discretion and limited discretion in decanting?
A trustee with expanded discretion, meaning distribution authority not tied to an ascertainable standard, has broader latitude under § 19511 to decant, including adjusting beneficial interests within statutory limits. A trustee limited to an ascertainable standard like health, education, or support has narrower authority under § 19512 and generally must preserve the same distribution standard for each beneficiary in the new trust.
Do beneficiaries have to be notified before a trustee decants a trust?
Yes. California’s decanting statute requires notice to beneficiaries and other qualified persons under § 19507 before the decanting takes effect. Beneficiaries have the right to object, and a trustee who proceeds over legitimate objections without solid justification risks a later challenge.
Is decanting the same thing as modifying a trust?
No. Modification under Probate Code §§ 15403-15404 usually goes through a court petition and beneficiary consent. Decanting is an exercise of the trustee’s existing discretionary authority to move assets into a new trust, and it often does not require court approval at all, though the two tools can apply to similar problems.
Does a beneficiary have to consent to a decanting in California?
No. An authorized fiduciary can decant without anyone’s consent and without a court order (Prob. Code § 19507, subd. (b)). What the trustee owes is 60 days’ written notice with copies of both trusts, and a beneficiary who wants to stop it generally has 59 days to go to court.
Can decanting move a trust out of California to save state income tax?
Sometimes, and less often than people expect. California taxes a trust if any trustee or any noncontingent beneficiary is a California resident (Rev. & Tax. Code § 17742), taxes California-source income regardless of where the trustee lives (Steuer v. Franchise Tax Bd. (2020) 51 Cal.App.5th 417), and taxes accumulated income when it’s later distributed to a California beneficiary whose interest was contingent (§ 17745).
Is decanting a taxable gift?
It can be. There’s no regulation on point, and the IRS won’t ordinarily rule on decanting that changes beneficial interests (Rev. Proc. 2026-3). The IRS’s Chief Counsel concluded in 2023 that beneficiaries who agree to a value-shifting trust change, or don’t object to one under a notice statute, make a gift of the interest they give up.
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