Trust Decanting: State Laws, Uniform Act and Tax Rules 2026
Some links pay us a referral fee; each one says so. Disclosure
Quick Answer
Trust decanting is a trustee’s power to pour all or part of an irrevocable trust into a second trust with different terms. As of November 8, 2026, the rules are state law, and they differ on who may decant, what the new trust may change and how much warning the beneficiaries get. In the 11 statutes we read, notice runs 30 days in New York, Ohio and Texas, 60 days in Florida, Virginia and Vermont, and 63 days in Colorado; Delaware’s section has no notice step and Nevada makes it optional. On tax, the IRS has not issued final rules: Notice 2011-101 asked for comments by April 25, 2012, and Rev. Proc. 2026-3, section 4.01(37), (55) and (61), still lists decanting that changes beneficial interests among the questions on which it will not ordinarily rule (income tax under sections 661 and 662, gift tax under section 2501, and loss of GST exempt status). For a trust with a health, education, maintenance and support clause, most statutes let a trustee move it to a trust with the same beneficial interests; changing who gets what is the part the IRS leaves open.
Key Takeaways
- There are two kinds of statute in our table. Seven are the state’s own statute (Delaware 12 Del. C. 3528, Florida 736.04117, New York EPTL 10-6.6, Nevada NRS 163.556, South Dakota SDCL 55-2-15, Texas Property Code 112.071 and following, Ohio 5808.18). Four follow the Uniform Trust Decanting Act structure: Colorado (15-16-901 and following), Virginia (64.2-779.1 and following), Vermont (14A V.S.A. 1401 and following) and Illinois (760 ILCS 3/1201 and following, where we could read only three sections).
- What the trustee’s own power says decides the route. Under the uniform act as enacted in Vermont, a fiduciary with “expanded” discretion cannot put a new person in the second trust or reduce a vested interest, and one with “limited” discretion (an ascertainable standard or a reasonably definite standard) must give each beneficiary “substantially similar” interests. Texas and New York say it more bluntly: with limited discretion the beneficiaries of the second trust must be the same.
- Notice is the delay you can count. Florida: “at least 60 days before the effective date.” Virginia and Vermont: “not later than 60 days before the exercise.” New York: effective “thirty days after the date of service.” Ohio: “not later than thirty days prior to that distribution.” Texas: “not later than the 30th day before.” Colorado: “not later than sixty-three days before the exercise.” In our $1,200,000 example, served on Monday January 11, 2027, the earliest dates are February 10, 2027 (30 days) and March 12, 2027 (60 days) (our arithmetic).
- A special-needs share is a named use in the statutes we read. Florida 736.04117(4), New York EPTL 10-6.6(n)(1), Virginia 64.2-779.10, Vermont 1413 and Colorado 15-16-913 each address a trust for a beneficiary with a disability. Vermont and Virginia let the fiduciary use the wider, expanded power for it even if the original clause was an ascertainable standard.
- The IRS answer is still that it will not rule. Notice 2011-101 said the IRS “will not issue private letter rulings (PLRs) with respect to such transfers that result in a change in beneficial interests” while it studied them, and Rev. Proc. 2026-3 section 4.01 repeats the subject three times: sections 661 and 662 (item 37), section 2501 (item 55) and the GST regime (item 61). We found no later final guidance in the bulletin we read.
- For a trust that was irrevocable on September 25, 1985, the GST regulation, 26 CFR 26.2601-1(b)(4)(i), has four safe harbors: (A) discretionary powers, (B) a court-approved settlement, (C) judicial construction, (D) other changes. Under (A), the trust instrument or the state law in force when the trust became irrevocable must authorize the distribution, and the new trust cannot push vesting past a life in being plus 21 years, with a stated 90-year term allowed. A decanting statute passed after the trust became irrevocable does not meet that wording (our reading).
CSV · 88 rows
Trust decanting: 11 state statutes, the Uniform Trust Decanting Act, Notice 2011-101, Rev. Proc. 2026-3 and the GST regulation, as of November 8, 2026
88 rows: for each of 11 states the citation, who may decant, who may be in the second trust, the notice period and the special-needs or term rule; the three decanting items in Rev. Proc. 2026-3 section 4.01; Notice 2011-101; the GST safe harbors in 26 CFR 26.2601-1(b)(4); and our arithmetic for a $1,200,000 trust. Each sourced row carries a link.
What decanting is, and what it is not
Decanting is the trust version of pouring wine into a new bottle. A trustee who already has power to pay principal to or for a beneficiary uses that power to pay it into a second trust instead, so the old terms can be replaced. The Internal Revenue Service describes it in Notice 2011-101 as “transfers by a trustee of all or a portion of the principal of an irrevocable trust (Distributing Trust) to another irrevocable trust (Receiving Trust), sometimes called ‘decanting,’” It is not a reformation by a judge and it is not an amendment by the grantor. Under Delaware’s section, the exercise is a written instrument signed by the trustee, and the power is treated as the exercise of a power of appointment (12 Del. C. 3528(b) and (c)).
Who it is for: an heir or trustee holding $250,000 to $2 million or more in a trust that is irrevocable and cannot be changed by its terms, where the document has a gap (no way to replace a trustee, a rigid payout, no provision for a beneficiary who now has a disability, a term that ends too soon). Our guides to revocable versus irrevocable trusts and the grantor trust rules cover the starting point. The uniform act as enacted in Vermont applies to an irrevocable trust, or one revocable only with the consent of the trustee or an adverse party, so a revocable trust the settlor can revoke alone is outside it, and its scope section excludes “a trust held solely for charitable purposes.”
Two limits shape everything below. First, the power belongs to a trustee (or another fiduciary), not to the settlor and not to a beneficiary who is only a beneficiary. Texas defines the “authorized trustee” as “a person, other than the settlor,” and Florida adds that the trustee must be “other than the settlor or a beneficiary.” Second, the instrument can say no: the uniform act as enacted in Vermont lets “a trust instrument … restrict or prohibit exercise of the decanting power,” and Delaware and Florida apply “unless the terms of the instrument expressly provide otherwise.”
State by state: 11 statutes, read from the code
We read each section on November 8, 2026 (Colorado and Texas from a mirror last updated May 26, 2025; the other nine from the legislature or its archived copy; see the sources note). The Uniform Law Commission’s enactment page would not load for us, so we do not give a count of enacting states and the “Uniform Act” column covers only the states whose code we opened. States not listed are not “no”; they are not verified.
| State | Statute | Uniform Act? | Who can decant | Who may be in the second trust | Notice before it takes effect |
|---|---|---|---|---|---|
| Colorado | C.R.S. 15-16-901 and following | Yes (Colorado Uniform Trust Decanting Act) | Authorized fiduciary with expanded or limited distributive discretion; limited means an ascertainable or reasonably definite standard | Expanded: no new current beneficiary and no cut to a vested interest. Limited: interests substantially similar | Notice not later than 63 days before exercise; waivable by all entitled |
| Delaware | 12 Del. C. 3528 | No, own statute | Trustee with authority to invade principal or income, alone or on an adviser’s direction | Only proper objects of the power; open class members, including unborn, allowed | No notice subsection in the text |
| Florida | Florida Statutes 736.04117 | No, own statute | Authorized trustee (not settlor or beneficiary) with an absolute power, or with a power that is not absolute | Only beneficiaries of the first trust. Not-absolute power: substantially similar interests | At least 60 days; immediate if all waive in writing |
| Illinois | 760 ILCS 3/1201 and following (Trust Decanting Law, P.A. 101-48, eff. 1-1-20) | Uniform-style article; only sections 1201, 1203 and 1217 read | Not verified | Not verified | Not verified |
| Nevada | NRS 163.556 | No, own statute | Trustee with discretion or authority to distribute income or principal | Only beneficiaries of the original trust | Optional: notice under NRS 164.725 or a court petition |
| New York | EPTL 10-6.6(b) and (c) | No, own statute | Unlimited discretion (paragraph b) or power without unlimited discretion (paragraph c) | Unlimited: may exclude beneficiaries, no additions. Limited: same current, successor and remainder beneficiaries | Effective 30 days after service; sooner with written consent |
| Ohio | ORC 5808.18 | No, own statute | Trustee with absolute power, or with a power that is not absolute | Power not absolute: second trust must not materially change beneficiaries’ interests | Not later than 30 days before the distribution; waivable by all current beneficiaries |
| South Dakota | SDCL 55-2-15 | No, own statute | Trustee with discretion to distribute, “whether or not restricted by any standard” | Only beneficiaries of the first trust who may receive now or later | 20 days if done by modifying the first trust; none stated for a separate second trust |
| Texas | Texas Property Code 112.071 to 112.087 | No, own statute | Authorized trustee (not the settlor) with full or limited discretion | Full: any of the current and remainder beneficiaries. Limited: the same current, successor and presumptive remainder beneficiaries | Not later than the 30th day before the distribution; certified mail or hand delivery |
| Vermont | 14A V.S.A. 1401 to 1429 (Act 177, eff. July 1, 2024) | Yes (Uniform Trust Decanting Act) | Authorized fiduciary with expanded or limited distributive discretion | Expanded: no new beneficiary, no cut to a vested interest. Limited: substantially similar | Not later than 60 days before exercise; notice period ends 59 days after notice |
| Virginia | Code of Virginia 64.2-779.1 and following (Article 8.1, 2017 c. 592) | Yes (Uniform Trust Decanting Act) | Authorized fiduciary with expanded or limited distributive discretion | Limited: substantially similar interests, with a deferred-distribution rule | Not later than 60 days before exercise, including advisors and protectors |
Source: Colorado C.R.S. 15-16-901, 911, 912, 907; Delaware Code title 12, 3528; Florida Statutes 736.04117; 760 ILCS 3/1201, 1203, 1217; NRS 163.556; New York EPTL 10-6.6; Ohio R.C. 5808.18; SDCL 55-2-15; Texas Property Code 112.071 to 112.074; 14A V.S.A. chapter 14; Code of Virginia 64.2-779.5, 779.9. “Who can decant” and “who may be in the second trust” are our short summaries of the section text.
Three patterns stand out.
Notice is where the states split. Delaware has no notice step in section 3528, Nevada’s is “may give notice,” South Dakota requires 20 days only when the trustee decants by modifying the first trust, and the uniform-act states require about two months, with a long list of recipients. Vermont’s list includes each settlor, each qualified beneficiary, each holder of a power of appointment, anyone who can remove the trustee, other fiduciaries of both trusts, the Attorney General in a charitable case and each “trust director.” Virginia adds “each person acting as an advisor or protector of the first trust.” Florida’s notice must go to “All trustees of the first trust” and “Any person who has the power to remove or replace the authorized trustee,” and it is not a trust disclosure document that starts a limitations period.
“Absolute” and “expanded” are the wide door; “limited” and “not absolute” are the narrow one. Florida defines an absolute power as one “not limited to specific or ascertainable purposes, such as health, education, maintenance, and support.” An old clause that pays principal only for health, education, maintenance and support is the narrow door in every state in the table. The consequence is the same wherever we read it: the second trust may change administration, the trustee’s terms and the term of the trust, but the beneficiaries keep substantially the same interests.
Where the trustee is also a beneficiary, the statutes get stricter. Nevada subsections 4 and 5 stop a trustee who is a beneficiary, or who can be removed and replaced by a related or subordinate person, from raising that person’s own distributions unless an ascertainable standard still limits them. South Dakota’s “restricted trustee” rules do the same. Check who the trustee is before you read anything else.
The Uniform Trust Decanting Act: expanded versus limited discretion
The uniform act splits trustees by what the document lets them pay. We read the act as enacted in Vermont (Act 177 of 2024), Colorado and Virginia, which share the same structure.
| Question | Expanded distributive discretion | Limited distributive discretion |
|---|---|---|
| What the trustee’s clause looks like | Power to pay principal not tied to an ascertainable or reasonably definite standard | Power “limited to an ascertainable standard or a reasonably definite standard” |
| New beneficiaries in the second trust | No: a second trust may not include a person who is not a current beneficiary of the first trust, or a new presumptive remainder or successor beneficiary | No new beneficiaries in effect: each beneficiary’s interest must be substantially similar to the first trust |
| Vested interests | Cannot be reduced or eliminated | Interests substantially similar, in the aggregate |
| Powers of appointment | May retain or omit (except a presently exercisable general power) and may create or modify one for a current beneficiary | Not authorized to rewrite interests; same-interest rule governs |
| Disability trust | Section 1413 (Vermont) lets a special-needs fiduciary use this wider power if the second trust is a special-needs trust | Same section: the fiduciary acts “as if” it had expanded discretion |
| Length of the second trust | May differ from the first trust, subject to perpetuities, accumulation and alienation limits (Vermont 1420) | Same |
| Tax guardrails (Vermont 1419) | Marital, charitable, annual exclusion, S corporation, GST zero-inclusion and required minimum distribution terms must not be changed to lose the benefit | Same |
Source: 14A V.S.A. 1411, 1412, 1413, 1419, 1420 (Act 177 of 2024); C.R.S. 15-16-911 to 15-16-913; Code of Virginia 64.2-779.9 and 779.10. The comparison is our summary.
The grantor-trust guardrail matters for income tax. Under Vermont 1419(b)(10), a fiduciary “shall not exercise the decanting power if a settlor objects in a signed record” within the notice period in two cases: both trusts are grantor trusts but the second one drops a power that could switch grantor status off, or a non-grantor first trust becomes a grantor trust for the settlor without that switch. Florida says the same in plain words: a settlor who is not the owner of the first trust “may not be treated as the owner of the second trust unless he or she at all times has the power to cause the second trust to cease being treated as if it were owned by the settlor” (736.04117(5)(c)). The sections 671 to 679 test is in our grantor trust guide.
What the IRS has said, and what it has not
Notice 2011-101 asked the public about decanting that changes beneficial interests. It listed 13 facts and circumstances, including whether a beneficiary’s interest is changed, whether a new beneficiary is added, a move between a grantor and a non-grantor trust, a longer term from a different situs, whether a court or the Attorney General must approve, and whether the Distributing Trust is GST exempt. It set April 25, 2012 for comments. It also said the IRS “generally will continue to issue PLRs with respect to such transfers that do not result in a change to any beneficial interests.” We found no later final guidance in the January 2026 bulletin; whether anything was published elsewhere since is not verified.
Rev. Proc. 2026-3 (Internal Revenue Bulletin 2026-1) is the current list of areas in which the IRS will not ordinarily issue rulings. Section 4.01 lists three decanting items:
| Item | Code section | What the IRS will not ordinarily rule on |
|---|---|---|
| 4.01(37) | Sections 661 and 662 | Whether decanting, or a modification of an irrevocable trust resulting in a change in beneficial interests, is a distribution that gives a deduction under section 661 or an inclusion under section 662 |
| 4.01(55) | Section 2501 | Whether that distribution or modification is a gift |
| 4.01(61) | Sections 2601 and 2663 | Whether decanting or modifying a GST exempt trust, with a change in beneficial interests, loses GST exempt status or is a taxable termination or taxable distribution under section 2612 |
Source: Rev. Proc. 2026-3, section 4.01, Internal Revenue Bulletin 2026-1 (irs.gov/irb/2026-01_IRB).
Read these literally. They are about rulings: a “no-rule” item does not say the transfer is taxable or tax-free; it says the IRS will not ordinarily tell you in advance. Our reading: for a change in beneficial interests, the only written IRS support is the GST regulation below, and it speaks to GST status alone.
The GST regulation. 26 CFR 26.2601-1(b)(4) covers modifications of a trust that is exempt from the generation-skipping transfer tax. Paragraph (b)(1)(i) exempts a generation-skipping transfer “under a trust … that was irrevocable on September 25, 1985,” and (b)(4)(i) says when a modification, construction, settlement or trustee action will not cost that status:
| Paragraph | Safe harbor | Conditions in the regulation |
|---|---|---|
| (b)(4)(i)(A) | Discretionary powers | (1) The instrument, or state law when the trust became irrevocable, authorizes the distribution to the new trust “without the consent or approval of any beneficiary or court”; and (2) the new trust does not extend vesting beyond a life in being at that date plus 21 years (plus gestation); a valid term of years up to 90 years from that date is not treated as beyond the period |
| (b)(4)(i)(B) | Settlement | Court-approved settlement of a bona fide issue, the product of arm’s length negotiations and within the range of reasonable outcomes |
| (b)(4)(i)(C) | Judicial construction | Resolves an ambiguity or corrects a scrivener’s error; a bona fide issue; consistent with what the state’s highest court would apply |
| (b)(4)(i)(D) | Other changes | Judicial reformation, or valid nonjudicial reformation, that does not shift a beneficial interest to a lower generation and does not extend the time for vesting beyond the original period |
Source: 26 CFR 26.2601-1(b)(4)(i)(A) to (D) (Legal Information Institute copy).
The general paragraph is explicit that these rules decide GST status only: “the rules do not apply in determining, for example, whether the transaction results in a gift subject to gift tax,” or whether the trust is in a beneficiary’s estate, or whether gain is realized under section 1001. That is why a decanting can clear the GST regulation and still leave the gift, income and estate questions in the no-ruling list above. For the dynasty and GST-exempt side, see our dynasty trust and GST exemption guide.
Worked example: a $1,200,000 trust with a health, education, maintenance and support clause
Assume (our assumptions, not a real trust) a trust of $1,200,000 that was irrevocable before September 25, 1985. It pays principal to two adult children only for health, education, maintenance and support. The corporate trustee wants to do three things: add a trust protector, let the trust run past the children’s lives, and set up a separate share for one child who now qualifies for disability benefits. A neutral trustee, not a beneficiary, would act.
| Move | Does it change beneficial interests? | What the statutes we read say | Tax point |
|---|---|---|---|
| 1. Add a trust protector who can replace the trustee | No: the children keep the same interests | Passes a same-interest test in limited-discretion states (Texas 112.073, New York 10-6.6(c), Ohio 5808.18(B), Vermont 1412). Virginia and Vermont put protectors on the notice list; Illinois 1217(d) lets the second-trust instrument reallocate powers to trust protectors | Notice 2011-101 says rulings “generally” continue for no change to any beneficial interest |
| 2. Extend the term | Possibly: a longer term can change when remainder interests vest | New York 10-6.6(e) and Florida 736.04117(3)(d) allow a longer term; the uniform act allows a different duration, within perpetuities limits | For a grandfathered trust, the GST safe harbor (A)(2) caps vesting at a life in being plus 21 years, with a 90-year term allowed. A term beyond that limit is outside (A), and (D) does not allow an extension of the time for vesting |
| 3. A $400,000 share in a special-needs trust for one child | Yes for that child; the other child’s $800,000 share stays substantially similar | Florida 736.04117(4), New York 10-6.6(n)(1), Virginia 64.2-779.10, Vermont 1413 and Colorado 15-16-913 each name this use | Falls under the no-rule items 4.01(37), (55) and (61) because beneficial interests change; GST safe harbor (A) or (D) must be checked |
Our arithmetic: $1,200,000 divided by 3 is $400,000 for the special-needs share, leaving $800,000. If notice is served Monday, January 11, 2027, it can take effect on February 10, 2027 (30 days; New York, Ohio, Texas) or March 12, 2027 (60 days; Florida, Virginia, Vermont), unless every person entitled to notice waives. Colorado’s notice must go out by the 63rd day before the exercise, which is March 15, 2027 if the exercise is dated March 15, 2027.
What a protector may do after the decanting is a separate question, covered in our guide to trust protector powers versus trustee powers by state. Here, one point: New York 10-6.6(n)(3) bars the trustee from eliminating another person’s right to remove or replace the trustee unless a court specifies otherwise.
What a reader can do with this
- Find the trustee’s power in the document. Look for how principal can be paid: “health, education, maintenance and support” is limited discretion; “best interests” or “welfare” is usually the wider kind (Florida 736.04117(1)(a) treats them as absolute).
- Find where the trust is governed and administered. Delaware’s section is “available to any trust that is administered in this State”; Florida applies to trusts “governed by the laws of this state or that have a principal place of administration” there; South Dakota applies to a trust whose governing jurisdiction is transferred there.
- Check who the trustee is and who can remove them. A trustee who is a beneficiary faces the Nevada and South Dakota limits.
- Ask whether the instrument forbids decanting. The uniform act and Virginia’s 64.2-779.12 honor an express prohibition, but “a general prohibition of the amendment or revocation of a first trust, a spendthrift clause” does not by itself stop it.
- Count the notice days from the state’s rule, not a rule of thumb. Thirty and 60 are the two common numbers in our table.
- Ask for the tax memo in writing. For any change to beneficial interests, ask the attorney which of the safe harbors in 26 CFR 26.2601-1(b)(4)(i) applies, and what the written view is on the three no-ruling items.
Questions for the trustee’s attorney
- Which statute governs this trust today, and is the trustee’s power expanded or limited under it?
- Does the plan change any beneficiary’s interest, and if so, how is it “substantially similar”?
- Who must receive notice, how many days, and can every one of them waive?
- If the trust is grandfathered for GST, which of (A) to (D) in 26 CFR 26.2601-1(b)(4)(i) is the basis?
- Is the trust a grantor trust, and does the second trust keep the power to turn that status off?
- What if one beneficiary objects?
This is analysis of public documents, not investment, legal or tax advice. Whether a trustee can decant a particular trust depends on its terms, the governing law and the facts; the person who can say is an estate attorney with the instrument in hand.
Update alert · free
An email when the trust decanting numbers change
When a rate, rule or filing behind this page changes: what changed, the one number that matters, and the source to check it yourself.
FAQ
Sources, read and saved on November 8, 2026: 12 Del. C. 3528 (Delaware Code Online); Florida Statutes 736.04117 (Online Sunshine, Florida Legislature, history through ch. 2025-159); New York EPTL 10-6.6 (New York State Senate site, read through the Internet Archive); Nevada Revised Statutes 163.556 (Nevada Legislature, read through the Internet Archive); South Dakota Codified Laws 55-2-15 (South Dakota Legislature statute service, source line through SL 2026, ch 198); Ohio R.C. 5808.18 (Ohio Laws, read through the Internet Archive); Code of Virginia 64.2-779.5, 779.7, 779.9, 779.10, 779.12 (Virginia Law); 14A V.S.A. chapter 14 as added by 2024 Act 177 (Vermont General Assembly); 760 ILCS 3/1201, 1203, 1217 (Illinois General Assembly, Internet Archive copy); Texas Property Code 112.071 to 112.074 and C.R.S. 15-16-901, 907, 911, 912 (public.law mirrors of the legislatures’ text, accessed May 26, 2025 by the mirror; we did not check 2025 session amendments); IRS Notice 2011-101; Rev. Proc. 2026-3 in Internal Revenue Bulletin 2026-1 (irs.gov); 26 CFR 26.2601-1 (Legal Information Institute). The Uniform Law Commission enactment page and the full uniform text could not be opened, so “Uniform Act” statements rest on each state’s own code. The $400,000, $800,000 and notice dates are our arithmetic. Not verified: Illinois sections 1204 to 1216, Colorado and Texas amendments after May 2025, states not listed, and any IRS decanting guidance published after the January 2026 bulletin.
Keep reading.
- 0129 min read
Grantor Trust Rules 2026: Who Pays the Tax, Form 1041 Reporting
Sections 671 to 679 one by one: who owns a trust for income tax, the triggering powers, Reg. 1.671-4 reporting on Form 1041 and a $100,000 who-pays example.
- 0217 min read
Atlantic Coast Life Insurance: Rehabilitation Petition of September 15, 2026, Florida Suspension, AM Best C+
Atlantic Coast Life: rehabilitation petition filed September 15, 2026, no order; Florida suspended it. Sentinel Security Life is not in the petition.
- 0321 min read
Barings Capital Investment Corporation 10-Q: NAV $21.88 at Sep 30, 2026, Down $0.53 Since December 31
Barings Capital Investment Corporation, a private BDC: NAV $21.88 at Sep 30, 2026 vs $22.41, 221.5% asset coverage, 1.7% of cost on non-accrual, 475 holders.