What do I need to know about decanting or changing a trust in Wyoming?

Posted by Gayla K. AustinMar 05, 2020

A recent Wyoming Supreme Court opinion, in the April 2019 term, the Everston case (1029 WY 84), identified three purposes for a proposed decanting of a trust:  (1) allowing Trust property to continue to be enjoyed by the Settlor's intended beneficiaries with favorable transfer tax and asset protection treatment; (2) solving the current uneconomic and impossible circumstances of the trust due to it being unintentionally underfunded by the Settlor; and (3) allowing the Settlor's intended beneficiaries to enjoy trust assets in two separate trusts in an amicable manner by separating beneficiaries who do not get along with each other.  

Wyoming gives authority to decant in its statute Wyo. Stat. Ann 4-10-816(a)(xviii) which states:  A trustee may . . . distribute all or any portion of trust income or principal in further trust for the benefit of trust beneficiaries pursuant to authority granted in the trust instrument to make discretionary or mandatory distributions of trust income or principal to the trust beneficiaries.  

And, Wyoming Stat. Ann 4-10-816(a)(xxx) allows a trustee to separate a trust for the benefit of more than one beneficiary into separate trusts or shares for each beneficiary, unless the trust instrument requires the trust property to be held in one trust for the beneficiaries.  

However, the Court's discussion in Everston made clear that the first determination is whether the trust agreement was unambiguous in allowing the proposed decanting.  

The Everston case on decanting is a case of first impression under the Uniform Trustee Powers Act.  

The two statutes in question here:  816(a)(xviii), which speaks to a trustee's power to distribute trust income or principal and 816(a)(xxx) which speaks to a trustee's power to separate a trust must be separately interpreted because the two powers under the Uniform Trustee Powers Act have yet to be thoroughly briefed under relevant circumstances in a case.  

Because Wyoming is a top situs location for moving or settling a trust, or changing it, how the Court goes forward in interpreting the Uniform Trustee Powers Act will be the best viewing spot for guidance in repurposing trusts in Wyoming.  

 In this case, the Trust Agreement gave the Trustee general authority to distribute net income and principal to one of the beneficiaries for any purpose, and to distribution income and principal to one of more members of a class to the exclusion of others, whether or note the terms of the trust specifically mention that possibility. 

Wyoming law generally allows for decanting (separating, distributing) of trust property.  The question is whether the trustee has the general authority to decant trust property under Wyoming law and the Trust Agreement.   

The way to determine whether your trust agreement should be repurposed or changed, or can be repurposed or changed, is for a estate law professional to review your trust agreement and speak with you about the intent of the trustor.  Here is a link to information on how to know when to change your trust.