Relates to a trustee's authority to recant the invasion of a trust and provides that within certain time frames a trustee may revoke the exercise of the power to invade a new trust

EPTL 10-6.6, the decanting statute, does not now provide for a trustee's authority to recant the invasion of a trust and creation of a new trust within the thirty day period before the decanting takes effect. The issues are: whether a trustee may reverse course after the notice of the decanting has been served; what form this recanting should take; and whether notice of the recanting must be served upon the persons interested in the invaded trust and new trust.

EPTL 10-6.6 permits a trustee to decant to a new trust and requires that notice of the decanting be served upon all persons interested in the invaded trust and new trust, inter alia (EPTL 10-6.6 (j)). Pursuant to paragraph (j) of this section, the exercise of the power must be in writing and, absent consent from the persons interested, is effective thirty days after the date of service of the instrument as provided under subparagraph (2) of paragraph (j). Subparagraph (2) sets forth the content of the notice which must be served upon those persons interested in the invaded trust and new trust. Where consent is obtained, the effective date is the date of the consent.

The initial question is: when does exercise of the power to decant become irrevocable? As a matter of simple reasoning, the decanting should be revocable until its effective date, since it is ineffective until that time. EPTL 10-6.6 (d) provides that "(a)n exercise of the power to invade trust principal under paragraphs (b) and (c) of this section shall be considered the exercise of a special power of appointment as defined in section 10-3.2 of this article." EPTL 10-9.1 (b) provides that the exercise of a special power becomes irrevocable when the donor "manifests his or her intention that its exercise be irrevocable." The provision in EPTL 10-6.6 that a decanting becomes effective in thirty days in effect represents a statutory directive that the decanting becomes irrevocable at that time. Accordingly, it is recommended that paragraph (j) be amended to add the following as the last sentence:

"The exercise of the power is irrevocable on the effective date, either 30 days following service of the notice or the effective date as set forth in the written consent."

From this, it follows that the trustee would have the authority to recant the decanting before it becomes irrevocable. Where a trustee has served the requisite notice of decanting, such notice must be served upon the same persons and in the same manner. To make clear such result, it is recommended that the statute be amended to add a new subparagraph (7) to paragraph (j) to read as follows:

"(7) Prior to the effective date as provided herein, a trustee may revoke the exercise of the power to invade to a new trust. Where a

trustee served notice of the exercise of the power pursuant to subdivision (2) herein, the trustee shall serve notice of the revocation of the exercise of the power to persons interested in the invaded trust and the appointed trust by registered or certified mail, return receipt requested, or by personal delivery or in any other manner directed by the court having jurisdiction over the invaded trust. Where the notice of the exercise of the power was filed with the court, the trustee shall file the notice of revocation of the exercise of the power with such court."

The proposed amendments raise another question, i.e., whether the requirement that the notice be filed with the court creates an additional filing requirement where a trustee recants the exercise of the power? To limit such instances, it is recommended that subparagraph (6) of paragraph (j) be amended to add the following underlined text as follows:

"(6) A copy of the instrument exercising the power shall be kept with the records of the invaded trust and within twenty days of the effective date, the original shall be filed in the court having jurisdiction over the invaded trust...."

This measure would amend paragraph (j) of EPTL 10-6.6 to resolve the uncertainty whether a trustee may recant a decanting during the thirty day period before the decanting takes effect. The amendments make clear that the trustee has such authority and provide the procedure to do so. The amendments address solely the right to recant during the thirty-day period and do not authorize a trustee to amend an invasion and creation of a trust during the thirty-day period. Following the effective date of the decanting, the new trust is irrevocable and may be changed only by a new exercise of the power to invade and creation of a new trust.

This measure, which would have no fiscal impact, would take effect immediately and apply to all estates and living trusts.

2014 Legislative History:

OCA 2014-102 Assembly 9761 (M. of A. Braunstein) (Passed)