New York Decanting Statute: Trustee Powers, Notice, and Limits

New York’s decanting statute, codified at EPTL 10-6.6, lets a qualifying trustee move assets from an existing irrevocable trust into a new trust with updated terms, without a court reformation proceeding. What the trustee can actually change depends on how much discretion the original trust gave them over principal, and the statute layers on notice requirements, documentation rules, and substantive limits that can void the transfer if missed.¹

Who Can Decant

Only an “authorized trustee” can exercise this power. The statute defines that as any trustee with authority to distribute trust principal to or for one or more current beneficiaries, with two exclusions: the trust’s creator cannot serve in this role, and neither can a beneficiary who is entitled to income or principal, whether mandatorily or in the trustee’s discretion.¹ The point is to keep the people who benefit from the trust from reshaping it to their own advantage.

If several trustees serve and only one meets the definition, that trustee alone holds the decanting power. If every trustee is either the creator or a beneficiary, decanting is not available until an independent trustee is added. Answer this threshold question before drafting anything.

What the Trustee Can Change: Unlimited vs. Limited Discretion

The scope of a decanting turns on whether the original trust gives the trustee unlimited discretion over principal, or ties distributions to a standard.

Unlimited Discretion

When the trust gives the trustee unrestricted authority to distribute principal, the new trust can look substantially different from the old one. The trustee can appoint assets for the benefit of one, some, or all current beneficiaries and can exclude any current beneficiary entirely. Successor and remainder beneficiaries can also be changed or removed.¹ A trustee could shift assets into a trust that benefits one child rather than three, or add spendthrift protection that was not in the original.

Limited Discretion

When distributions are tied to a standard such as health, education, maintenance, or support, the new trust must keep the same current beneficiaries and the same successor and remainder beneficiaries.¹ Nobody comes in, nobody goes out. Decanting in this posture is confined to administrative changes: updating investment provisions, correcting drafting errors, consolidating trusts, or extending the trust term. When a trust has one trustee with unlimited discretion and another with limited discretion, the one with unlimited discretion controls.

What the New Trust Can Look Like

The statute calls the original trust the “invaded trust” and the receiving trust the “appointed trust.” The appointed trust can be a new trust the trustees create for this purpose; it does not have to already exist.¹

The appointed trust can run longer than the original, including for the lifetime of a current beneficiary. When a trustee with limited discretion extends the term beyond what the original allowed, the appointed trust may grant its new trustees unlimited discretion to invade principal during that extended period. The power can be exercised whether or not there is any current need to distribute principal; it is not reserved for emergencies.

A decanting can be full or partial. If the trustee appoints all of the invaded trust’s principal, later-discovered and after-acquired assets flow automatically into the appointed trust. If the trustee appoints only part, those later assets remain in the original trust, which continues to operate.¹ Partial decanting is useful when only some provisions need updating, or when moving everything at once would raise tax problems.

The Instrument, Notice, and the Thirty-Day Wait

The trustee prepares a written instrument, signed, dated, and acknowledged before a notary. It must state whether the trustee is appointing all or part of the principal, and if part, the approximate percentage being transferred.¹ The statute treats the exercise as a special power of appointment, and the instrument is the formal record. Where the appointed trust is newly created, the trustee’s execution and acknowledgment of it satisfies the usual requirement that a trust be executed by its settlor.

Before the decanting takes effect, the trustee must deliver copies of the instrument, the invaded trust, and the appointed trust to three groups: the trust’s creator (if living), anyone with power to remove or replace the trustee, and everyone interested in either trust. For a minor or incapacitated beneficiary, notice goes to the guardian, conservator, or the parent the beneficiary resides with.¹

Delivery is by registered or certified mail with return receipt requested, by personal delivery, or by another method the court with jurisdiction directs. The decanting becomes effective thirty days after service is complete. Everyone entitled to notice can consent in writing to an earlier effective date, but without unanimous written consent, the thirty-day clock runs in full. Once the effective date arrives, the decanting is irrevocable. Before that date, the trustee can revoke it.

What a Beneficiary Objection Does

Any person interested in the invaded trust can serve a written objection on the trustee before the effective date. The statute does not require the trustee to stop. An authorized trustee can exercise this power without the consent of the creator, without the consent of beneficiaries, and without court approval.² A written objection creates a record and may support a later court challenge, but it does not automatically block the transfer.

A trustee who proceeds over a well-founded objection is taking on real risk. If a court later finds the decanting breached the trustee’s fiduciary duty, the trustee can be surcharged for any resulting loss. On the other side, silence is not consent under the statute: a beneficiary who fails to object does not waive later claims.

What the Statute Will Not Let a Trustee Do

Regardless of how much discretion the trustee has, EPTL 10-6.6 draws hard lines.

Vested mandatory interests are protected. A trustee cannot reduce, limit, or modify a beneficiary’s current right to mandatory income or principal distributions, mandatory annuity or unitrust interests, or withdrawal rights, once that right has taken effect for the beneficiary.¹
Tax benefits claimed on the original contributions must be preserved. The decanting cannot jeopardize the annual gift tax exclusion, the marital deduction, the charitable deduction, or a direct-skip qualification for generation-skipping transfer tax purposes.¹
The decanting cannot violate New York’s rule against perpetuities. A violation voids the entire exercise, not just the offending provision.¹
Trustee compensation cannot be changed absent a court order. Commissions continue on the terms set by the original trust, and no trustee can take a commission for the act of transferring assets between the trusts.¹

A spendthrift clause in the original trust does not block decanting. Neither does a general prohibition on amendment or revocation. The only trust language that stops the exercise is language that expressly prohibits decanting itself.

Fiduciary Duty and Creator Intent

Even where no specific limit applies, the trustee is held to a fiduciary standard. The statute requires the trustee to act in the best interests of the proper beneficiaries and as a prudent person would under the circumstances.¹

There is also a creator-intent guardrail. If there is substantial evidence that the creator would have opposed the decanting, the trustee cannot proceed unless the trustee can show the creator would likely have changed course under current circumstances. The statute is explicit that the terms of the invaded trust are not enough, standing alone, to constitute substantial evidence of contrary intent, unless the trust expressly prohibits the contemplated exercise. A trust that says “this trust shall not be amended” does not block decanting. Only an express prohibition on decanting does.

Federal Tax Uncertainty

This is where trustees most often get into trouble, because there is little formal guidance. As of early 2026, the IRS has not issued a revenue ruling or regulation on the federal income, gift, or generation-skipping transfer tax consequences of decanting. The IRS listed these issues as “under study” in 2011 and continues to list them as unresolved on its priority guidance plan.

On income tax, the open question is whether a decanting that changes beneficial interests triggers a distributable net income event, giving the invaded trust a deduction and forcing one or more beneficiaries to recognize income. Practitioners rely on private letter rulings and analogies to trust merger and modification rules. A decanting limited to administrative changes (investment powers, trustee succession, situs) is generally treated as low-risk. Shifting economic interests between beneficiaries raises exposure.

On gift tax, a trustee-beneficiary who holds absolute discretion to distribute to themselves may hold what amounts to a general power of appointment. A decanting that reduces or eliminates that power can be treated as a taxable gift. The risk drops when the discretion is confined to an ascertainable standard such as health, education, maintenance, and support, because that limitation generally keeps the power from being classified as a general power of appointment.

On generation-skipping transfer tax, an exempt trust needs to keep its status through the decanting. For trusts that became irrevocable on or before September 25, 1985, Treasury regulations provide a safe harbor: exempt status is preserved if state law authorized the distribution to a new trust without beneficiary or court consent, and the new trust does not extend the vesting period beyond a life in being when the original trust became irrevocable, plus twenty-one years.³ For zero-inclusion-ratio trusts (those where the settlor allocated GST exemption), there is no official safe harbor. Private letter rulings suggest the same principles apply, but a private letter ruling cannot be cited as precedent by another taxpayer. Any trustee considering decanting a GST-exempt trust should evaluate this with a tax advisor before filing the instrument.

Common Reasons New York Trustees Use the Statute

Most decantings are practical rather than dramatic. Trustees use the statute to add or strengthen spendthrift protection when a beneficiary faces creditors or divorce, to consolidate small trusts, to remove outdated investment restrictions in older instruments, and to fix drafting errors that would otherwise require a court proceeding. Tax-motivated uses are also common: moving a trust’s situs from New York to a state with no fiduciary income tax, or extending a trust’s term to make better use of the GST exemption. The statute is broad enough to reach all of these, but the discretion rules, the notice mechanics, and the tax uncertainty control whether any given decanting is safe to do.