Trust Decanting Requirements in Utah
At a glance
| Governing law and available decanting route | Compact Utah decanting section; trustee may distribute part/all income or principal to separate-trust instrument or modify first-trust terms (Utah Code § 75B-2-812.5(1)-(2)) |
|---|---|
| First-trust scope, state connection, retroactivity, and opt-out | Trust with discretionary income/principal power, administered under Utah law including jurisdiction transferred to Utah; chosen distribution/modification route unavailable if expressly prohibited by first-trust instrument (§ 75B-2-812.5(1)-(2), (10)) |
| Authorized fiduciary and required distribution power | Trustee with instrument discretion to distribute income or principal for a beneficiary; beneficiary-trustee or trustee subject to beneficiary replacement power is “restricted trustee” with conditional limits (§ 75B-2-812.5(1)-(2), (5)-(6)) |
| Expanded, limited, mandatory, and ascertainable-standard branches | No expanded/limited statutory tracks; ordinary threshold is discretionary income or principal, while restricted-trustee benefit/increase/loosening rules use health, education, maintenance, or support limits and a Medicaid-trust exception (§ 75B-2-812.5(2), (5)-(6)) |
| Beneficiary, vested-interest, and power-of-appointment changes | Second trust needs at least one first-trust beneficiary with current discretionary or specified future distribution eligibility; gift vesting, current income, and withdrawal interests protected; may grant appointment power to beneficiary of both trusts with any-person appointees (§ 75B-2-812.5(4), (7)-(9)) |
| Second-trust terms, duration, governing law, and administration | Separate-instrument recipient trust or modified first trust; part/all income or principal permitted; section states no separate duration, governing-law, situs, trustee, multiple-second-trust, or later-property rule (§ 75B-2-812.5(1)-(4), (10)) |
| Tax, charitable, special-needs, compensation, and other guardrails | Restricted-trustee HEMS/Medicaid limits; preserves § 2503(b) vesting, marital/charitable-remainder/GRAT income interests and withdrawal powers; exercise is appointment power but cannot become general power (§ 75B-2-812.5(5)-(9)) |
| Notice, recipients, consent, waiver, objection, and representation | Modification branch only: written notice to all beneficiaries at least twenty days before exercise; section states no content, delivery, waiver, representation, consent, objection, or separate-trust-distribution notice rule (§ 75B-2-812.5(2)(c)) |
| Exercise instrument, court review, effectiveness, and remedies | Trustee must first determine necessity/desirability from first-trust purposes, second-trust terms/conditions, and distribution consequences; section states no exercise-record, signature, acknowledgment, filing, court-review, effectiveness, saving, defect, limitation, liability, or remedy procedure (§ 75B-2-812.5(3)) |
Requirements one by one
Authority and required determination
Utah Code § 75B-2-812.5(2) authorizes two routes when the trustee has instrument-based discretion to distribute income or principal for a beneficiary: move part or all income or principal to a trust governed by a separate instrument, or modify the first-trust instrument. An express instrument prohibition blocks the route it names, while a general no-amendment, no-revocation, or spendthrift clause does not.
Before either exercise, subsection (3) requires the trustee to determine that the distribution or modification is “necessary or desirable” after considering the first trust's purposes, the second trust's terms and conditions, and the distribution's consequences. Subsection (10) limits the statutory connection to a trust administered under Utah law, including one whose governing jurisdiction has been transferred to Utah.
Beneficiary and restricted-trustee limits
Subsection (4) requires the second trust to include at least one first-trust beneficiary for whom a trustee has present discretionary distribution authority or specified future distribution authority. This is not a general requirement that every beneficial term or every beneficiary remain unchanged.
A trustee-beneficiary, or a trustee subject to a beneficiary's power to install the beneficiary or a related/subordinate replacement, is a restricted trustee. Subsections (5) and (6) condition when that trustee may benefit itself, increase specified distributions, or loosen distribution restrictions, using health, education, maintenance, or support and Medicaid-trust guardrails tied to the listed United States tax connections.
Subsections (7) through (9) preserve specified gift-vesting, current-income, and withdrawal interests and prevent the decanting power from becoming a general power of appointment. A second trust may nevertheless grant an appointment power to a beneficiary of both trusts, and the appointees may include the holder, the holder's creditors or estate, or any other person.
Notice is branch-specific
Subsection (2)(c) requires written notice to all beneficiaries at least twenty days before a trustee uses the modification branch. It does not state the same notice condition for a distribution to a trust governed by a separate instrument. The section supplies no required notice contents, delivery method, waiver, representation, consent, or objection effect for either route.
No decanting-specific instrument or court procedure
Section 75B-2-812.5 states no signature, acknowledgment, filing, recordkeeping, court-approval, court-review, saving, defect, limitations, liability, or remedy procedure for exercising the decanting power. Other trust-instrument, trust- creation, fiduciary-duty, and judicial rules may matter, but they are not a decanting procedure supplied by this section.
What trips people up
The twenty-day notice cannot be generalized across both branches. The statute places it specifically before an exercise “to modify the terms of the trust instrument of a first trust.” A separate-instrument distribution remains subject to the statute's other conditions, but subsection (2)(c) does not attach its notice sentence to that branch.
“Restricted trustee” does not mean every trustee with a limited distribution standard. It means a trustee who is also a first-trust beneficiary or whose office is subject to the defined beneficiary replacement power; the additional limits apply only with one of subsection (6)'s listed United States tax connections.
Common questions
Must every first-trust beneficiary remain in the second trust?
Section 75B-2-812.5(4) states a narrower minimum: the second trust must have a first-trust beneficiary with the described present discretionary or specified future distribution connection. Other protected interests and restricted- trustee rules still apply.
Can the trustee use the statute for income as well as principal?
Yes. Subsection (2)(a) authorizes distribution of part or all of the income or principal to the separate-instrument trust, and either income or principal discretion can satisfy the ordinary threshold.
Can the second trust grant a new appointment power?
Yes, to a beneficiary of both trusts. Subsection (9) permits appointees beyond the second trust's beneficiaries, subject to the bar on turning the decanting power itself into a general power of appointment.
Statutes and sources
- Utah Code § 75B-2-812.5 — complete current decanting section: authority, definitions, instrument prohibition, required determination, beneficiary connection, restricted-trustee and tax limits, appointment powers, notice, and Utah-law connection. Official text (accessed September 12, 2026).
Source links
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