The California decanting statute, formally the California Uniform Trust Decanting Act (CUTDA), lets the fiduciary of an irrevocable trust pour its assets into a new trust with different terms, or modify the existing terms, without beneficiary consent and without court approval.1California Legislative Information. California Code – Uniform Trust Decanting Act It took effect January 1, 2019, and applies to trusts created before or after that date. The power is real, but it is bounded: the trustee’s level of discretion controls what can change, a 60-day notice must go out first, and several categorical protections cannot be worked around.
Which Trusts the Statute Reaches
CUTDA covers irrevocable trusts and trusts that can be revoked only with the consent of the trustee or a person holding an adverse interest.2California Legislative Information. California Code Probate Code – Section 19503 Fully revocable trusts fall outside the statute because the settlor can amend directly. The trust also needs a California connection: its principal place of administration must be in California, or its instrument must say California law governs administration or construction.3California Legislative Information. California Code Probate Code – Section 19505
Read the trust before reading the statute. The instrument itself can restrict or prohibit decanting, and that language controls.2California Legislative Information. California Code Probate Code – Section 19503 Trusts held solely for charitable purposes are excluded from CUTDA entirely.
Who Can Decant
Only an “authorized fiduciary” can exercise the power. That means a trustee or other fiduciary, never a settlor, who has discretion to distribute all or part of the trust’s principal to current beneficiaries.4California Legislative Information. California Code Probate Code – Section 19502 Definitions If the trust gives the trustee no principal discretion and instead requires fixed distributions on a schedule, the trustee generally cannot decant. Special needs trusts have their own rule, covered below.
What the Second Trust Can Change
The scope of the trustee’s discretion drives everything. CUTDA splits authorized fiduciaries into two categories, and the category sets the ceiling on what the new trust can look like.
Expanded Distributive Discretion
A trustee with expanded discretion has broad authority over principal that is not tied to an ascertainable standard such as health, education, maintenance, and support. That trustee can change administrative provisions, adjust distribution schedules, modify powers of appointment, and shift beneficial interests among the existing class of beneficiaries.5California Legislative Information. California Code Probate Code – Section 19511
Even here, three hard limits apply. The second trust cannot add a current beneficiary who was not already a current beneficiary of the original. It cannot bring in new remainder or successor beneficiaries from outside the original beneficiary classes. And it cannot reduce or eliminate a vested interest, meaning a right to a mandatory distribution that does not depend on discretion or an uncertain event.5California Legislative Information. California Code Probate Code – Section 19511
Limited Distributive Discretion
When the original trust ties distributions to an ascertainable standard, the second trust must generally give each beneficiary the same types of interests they held in the original. Administrative changes, consolidations, and divisions are still available, but substantive rewrites of beneficial interests are largely off the table.
The 60-Day Notice
Before decanting, the fiduciary must give written notice at least 60 days in advance to:6California Legislative Information. California Code Probate Code – Section 19507
- Each living settlor of the original trust
- Each qualified beneficiary
- Each holder of a presently exercisable power of appointment over any part of the trust
- Each person who currently has the right to remove or replace the fiduciary
- Every other fiduciary of the original trust and every fiduciary of the second trust
- The Attorney General, if the trust contains a determinable charitable interest
The notice has to describe how the fiduciary intends to exercise the decanting power, the reasons for doing so, the differences between the original and second trusts, the proposed effective date, and copies of both trust instruments.6California Legislative Information. California Code Probate Code – Section 19507 It must also carry a prominent bold-type warning telling recipients they have 59 days from the date of notice to file a court challenge or lose the right to contest.
If the fiduciary knows or has reason to know that a recipient cannot manage their own financial affairs or is vulnerable to fraud or undue influence, notice also goes to that person’s appointed representative, such as an agent under a power of attorney. For minor, unborn, or unascertained beneficiaries, the fiduciary must arrange for a guardian ad litem to receive notice on their behalf.6California Legislative Information. California Code Probate Code – Section 19507
How the Decanting Is Executed
The exercise itself has to be in a signed writing. That document identifies the original trust and the second trust or trusts, specifies what property moves and to which trust, and states what property, if any, remains in the original.7California Legislative Information. California Code Probate Code – Section 19510 The fiduciary can incorporate details from the earlier notice by reference. No court approval is required for the exercise itself.
Court involvement is optional but available. The fiduciary, anyone entitled to notice, any beneficiary, or the Attorney General (for charitable interests) can petition for instructions, formal approval, or an order that a proposed or completed decanting is ineffective as a CUTDA violation or a breach of fiduciary duty. The court can also appoint a special fiduciary to evaluate and, if appropriate, exercise the power.8California Legislative Information. California Code Probate Code – Section 19509 When the fiduciary petitions, the burden is on the fiduciary to show proper notice and authority.
Limits That Cannot Be Worked Around
Some protections apply regardless of how much discretion the trustee holds.
A fiduciary cannot increase their own compensation through decanting if the original instrument set a specific compensation level.9California Legislative Information. California Code Probate Code – Section 19516
Charitable interests get heightened protection. If the original trust holds a determinable charitable interest, the second trust cannot diminish that interest, reduce the share of the identified charitable organization, alter a stated charitable purpose, or change any condition tied to the charitable interest.10California Legislative Information. California Code Probate Code – Section 19514 The Attorney General has the same standing as a qualified beneficiary. The second trust must also remain under California law unless the Attorney General consents or a court approves a different jurisdiction.
Tax-favored terms are locked in. If the original trust holds property that qualified for a marital deduction, the second trust cannot include or omit any term that would have disqualified or reduced that deduction.11California Legislative Information. California Code Probate Code – Section 19519 The same rule applies to charitable deductions for income, gift, or estate tax purposes and to the annual gift tax exclusion under Internal Revenue Code Section 2503(b). These statutory guardrails address the shape of the second trust; they do not resolve federal income, gift, or generation-skipping transfer tax questions that the IRS has not fully answered, and a trust with GST-exempt status deserves specialized tax review before any decanting.
Special Needs Trusts
CUTDA has a dedicated path for trusts benefiting a person with a disability. A “special needs fiduciary” can decant as though holding expanded distributive discretion, even when the original trust confers only limited or mandatory distribution authority, if two conditions are met: the second trust must be a special needs trust that would not count as a resource for government benefits, and the fiduciary must determine that decanting furthers the purposes of the original trust. The second trust can include Medicaid payback provisions under 42 U.S.C. 1396p(d)(4)(A) or take the form of a pooled trust under 42 U.S.C. 1396p(d)(4)(C).12California Legislative Information. California Code Probate Code – Section 19513 The usual bar on reducing a vested interest does not apply to the disabled beneficiary’s own interest here.
The trap sits outside the state statute. For self-settled special needs trusts, the Social Security Administration treats decanting as a form of early termination. Under SSA policy, a trust with an early termination clause counts as a resource for SSI and Medicaid unless, on termination, every state that provided Medicaid is reimbursed before any other disbursements and remaining funds go back to the disabled beneficiary. The SSA recognizes a narrow exception where the decanting clause permits transfers only to another self-settled special needs trust for the same beneficiary, with language limiting disbursements to that transfer or to certain administrative expenses. Sloppy drafting can cost the beneficiary their SSI and Medicaid eligibility.
Fiduciary Duty and the Cost of Getting It Wrong
Decanting is a fiduciary act. The trustee must act in good faith and in the beneficiaries’ best interests, and should weigh the settlor’s original intent. A decanting that serves the trustee’s convenience while undermining the settlor’s purpose invites a breach-of-duty claim.
The consequences are concrete. A successful beneficiary challenge can produce a court order that the decanting is ineffective, unwinding the entire transaction.8California Legislative Information. California Code Probate Code – Section 19509 The trustee can face personal liability for tax penalties, legal fees, and diminished trust value. When authority is uncertain, a petition for instructions before acting costs less than litigation after the fact.
CUTDA is not the only route to modify an irrevocable trust. The statute expressly leaves in place other California modification tools, court orders, and nonjudicial settlement agreements, any of which may fit better than decanting in a given case.2California Legislative Information. California Code Probate Code – Section 19503