Trust Decanting Requirements in Delaware

At a glance

Requirements one by one

Delaware uses appointment in further trust, including modification

Under 12 Del. C. § 3528(a), a trustee may appoint all or part of the principal, income, or both to a second-trust trustee. The second trust may be a separate trust or the first trust as modified, and it may operate under the same or a different instrument. The trustee's statutory principal-appointment power includes authority to create the second trust.

The first trust must be administered in Delaware and fit the listed forms

Section 3528(a) reaches a testamentary instrument or irrevocable inter vivos trust agreement, including a nominally revocable trust created by a settlor who presently lacks capacity to revoke it. Subsection (f) makes the section available to a trust administered in Delaware and deems the decanting power included unless the governing instrument expressly prohibits it. The section states no creation-date or trust-property-location condition.

A trustee may act through discretion, direction, or adviser consent

The trustee must hold authority under the instrument to invade principal, income, or both for one or more proper objects. Section 3528(a) expressly covers a trustee acting in discretion or at an adviser's direction or with an adviser's consent. It does not create a separate route for a nontrustee fiduciary, beneficiary, settlor, or court-appointed special fiduciary.

The first trust's distribution standard remains the ceiling

Delaware does not split § 3528 into expanded and limited tiers. The exercise must comply “in all respects” with every standard limiting the first-trust distribution authority. The statute nevertheless permits decanting even when that standard would not permit a current outright distribution of all trust assets. It states no route based only on mandatory distribution authority.

Proper objects define the beneficiary pool, with two important overlays

Ordinarily, the second trust may include only people who are proper objects of the first-trust power. It may later hold remaining assets for first-trust beneficiaries on substantially identical terms. An open beneficiary class may remain open longer, including for unborn future members, but cannot distribute to the class sooner or in greater amounts than the first trust allowed.

Section 3528(a) also permits an appointment power for a proper object whose appointees may include the powerholder, creditors, estate, estate creditors, or any other person, whether or not that appointee was a first-trust beneficiary. Property subject to a presently exercisable withdrawal power is excluded when the holder is the only permissible distribution beneficiary.

The second trust may last longer

The appointment may use the same or a different instrument, create a new trust, or modify the first trust. Under § 3528(c), a second trust may have a longer term, including one measured by a current beneficiary's life, subject to Delaware's Title 25, Chapter 5 perpetuities rules. The section states no separate multiple- second-trust, situs, governing-law, later-property, or partial-decanting-effect procedure.

The express tax protections are targeted

For a § 2503(c) gift-tax trust, § 3528(a)(2) prevents postponing the beneficiary's remainder vesting or distribution date. Subsection (a)(3) bars a reduction in the income or unitrust interest of a beneficiary of a trust for which a federal or comparable state marital deduction was taken. The singleton withdrawal-power exclusion is in subsection (a)(4). Section 3528 states no separate charitable-deduction, GST, grantor-trust, S-corporation, retirement- interest, public-benefit, compensation, or exculpation guardrail.

Section 3528 imposes no notice or consent process

No subsection requires advance or later notice to a settlor, beneficiary, fiduciary, Attorney General, or court. The section likewise states no beneficiary consent, waiver, objection, attachment, delivery, or representation rule. An adviser's direction or consent remains necessary only when the first-trust instrument makes it part of the trustee's invasion authority.

A trustee-signed writing exercises the power

Section 3528(b) requires an instrument in writing signed by the trustee. It states no acknowledgment, notarization, filing with trust or public records, effective-date, or court-approval requirement and no saving, defect, limitations, or special-remedy procedure.

Under § 3528(e), the ordinary care and liability standards for an outright distribution apply to the trustee and a directing or consenting adviser. Neither has a duty to exercise or consider the power, and absent willful misconduct neither is liable for failing to do so. Subsection (g) also imports the § 3315 discretion standard.

What trips people up

• No statutory notice period appears in § 3528. A first-trust term, fiduciary duty, court order, or another law may still matter, but is not this section's decanting procedure.
• The section includes a revocable-form trust only when its settlor presently lacks revocation capacity; it does not state a general revocable-trust route.
• A second-trust appointment power may reach nonbeneficiary appointees even though the second trust's beneficiary pool ordinarily consists of proper objects of the first-trust power.

Common questions

Must the trustee be able to distribute every asset outright now?

No. The exercise must comply with the first trust's limiting standard, but § 3528(a) says decanting may occur even when a current outright distribution of all assets would not be permitted under that standard.

May the second trust have a longer duration?

Yes. Section 3528(c) expressly permits a longer term, including one measured by a current beneficiary's lifetime, subject to the referenced Delaware perpetuities rules.

Must the trustee seek a Court of Chancery order?

Section 3528 does not make a court order an exercise condition. The statutory formality is a written instrument signed by the trustee.

Statutes and sources

• 12 Del. C. § 3528 — trust scope, Delaware administration, trustee power, beneficiary and tax protections, longer duration, signed writing, care and liability standards, and opt-out. Delaware Code Online (accessed 2026-09-19).