Decanting to ‘Rewrite’ an Irrevocable Trust By Ronald A. Fatoullah, Esq. and Yan Lian Kuang-Maoga, Esq. On September 30, 2013, Nassau County Surrogate’s Court ruled in favor of a trustee who had exercised the power to transfer assets of an irrevocable trust into a new trust, i.e., a supplemental needs trust, for a disabled beneficiary. This action protected the disabled trust beneficiary’s assets, while preventing him from losing his governmental benefits. The case brings attention to the use of New York’s “decanting” statute to basically rewrite an irrevocable trust when circumstances have changed. An irrevocable trust, whether it was created as irrevocable, became irrevocable after the death of the creator of a revocable trust, or was created under a decedent’s Last Will and Testament, is a trust that cannot be changed. However, in life, everything is subject to change. Therefore, as time passes and circumstances change for the beneficiaries of an irrevocable trust, it is not uncommon to see that the terms of a trust are no longer beneficial and may even be detrimental to the beneficiary and contradictory to the original intent of the creator. The decanting statute allows a trustee, under certain circumstances, to transfer the trust assets into a new irrevocable trust. This generally can be done without the involvement of a court. This power is exercised by executing a written instrument signed, dated, and acknowledged by the trustee. Unless all interested parties consent to the new trust in writing, all interested parties must be served with notice and the decanting becomes effective only once 30 days have passed since the date of the notice. In the aforementioned case, the irrevocable trust gave the disabled beneficiary the right to withdraw all the principal of the trust (approximately $400,000) upon reaching the age of 21. The creator of the trust was the disabled beneficiary’s grandfather. The trust had been created when the beneficiary was only 19 months old and had no noticeable disability at the time. The beneficiary was later discovered to suffer from several disabilities and thus became the recipient of government benefits. The right to withdraw principal from the trust when the beneficiary turned 21 would have jeopardized his continuing eligibility for benefits, and would have frustrated the original intent of the creator. The trustee therefore used the guidelines of the decanting statute and transferred the trust assets into a supplemental needs trust. The assets provided by the creator in the new supplemental needs trust will continue to be available for the benefit of the disabled beneficiary but will not jeopardize the beneficiary’s continuing eligibility for government benefits. The assets will be available to supplement the beneficiary’s needs for the rest of his life and any remaining assets will be disbursed to the creator’s intended remainder beneficiaries, not to the government. The decanting statute is available for trustees to consider using when circumstances of the beneficiaries change and the terms of the trust are no longer appropriate. The trustee in this recent case used ELDER LAW the statute to protect a beneficiary who had become disabled. This may be an option for a beneficiary who has been shown to be unable to, or should not, manage funds. A trustee should seek legal advice to assess all available appropriate options. Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that exclusively concentrates in elder law, estate planning, Medicaid planning, special needs, guardianships, trusts and wills. The firm has offices in Forest Hills, Great Neck, Manhattan, Brooklyn, and Cedarhurst, NY. This article was written with the assistance of Yan Lian Kuang- Maoga, an elder law attorney with the firm. Ronald Fatoullah & Associates can be reached by calling (718) 261-1700, 516-466- 4422, or toll free at 1-877-ELDERLAW or 1-877-ESTATES. The Elder Law Minute™ 36 North Shore Towers Courier n December 2013 ROnald Fatoulah, ESQ, CELA* Charles H. Greenthal Property Sales, Inc. Hanukkah on Thanksgiving! is year, we will be celebrating Hanukkah on anksgiving, so expect turkey and latkes on the table! is is the only time it will ever happen. Read below to see the explanation: Why has it never happened before? anksgiving is set as the fourth ursday in November, meaning the latest it can be is 11/28. 11/28 is also the earliest Hanukkah can be. e Jewish calendar repeats on a 19 year cycle and anksgiving repeats on a 7 year cycle. You would therefore expect them to coincide roughly every 19x7=133 years. Looking back, this is approximately correct. e last time it would have happened is 1861. However, anksgiving was only formally established by President Lincoln in 1863. So, it has never happened before. Why won’t it ever happen again? e reason is because the Jewish calendar is very slowly getting out of sync with the solar calendar, at a rate of 4 days per 1000 years. is means that while presently Hanukkah can be as early as 11/28, over the years the calendar will dri forward, such that the earliest Hanukkah can be is 11/29. e next time Hanukkah falls on 11/28 is 2146, which is a Monday. erefore, 2013 is the only time Hanukkah will ever overlap with anksgiving. Of course, if the Jewish calendar is never modi ed in any way, then it will slowly move forward through the Gregorian calendar, until it loops all the way back to where it is now. So, Hanukkah would again fall on ursday, 11/28….in the year 79,811! Given our trajectory toward global war, it is fair to say humans won’t be here then. And if there are no humans, the holidays will be cancelled. So on November 28th, 2013, enjoy your turkey and your latkes. It has never happened before, and it will never happen again. On behalf of Linda Rappaport and the Greenthal Property Sales Team we would like to wish you and your Families a Happy Hanukah LINDA RAPPAPORT On-Site Licensed Real Estate Broker North Shore Towers & Country Club Resident for over 25 years Call today to see the difference Greenthal Property Sales makes in getting you the highest price on the most important property at North Shore Towers - Yours!!! H NOVEMBER SALES H Studios 3 1 Bedroom 1 Bath 0 1 Bedroom 2 Baths 1 1 Bedroom 1.5 Baths 5 2 Bedroom 2.5 Baths 1 3 Bedroom 3.5 Baths 1 Penthouses 0 Total Sales 11 (718) 423-3130 [email protected] www.nstowers.com
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