Petition for Decanting - Arkansas

PETITION FOR DECANTING — ARKANSAS

INSTRUCTIONS

☐ Confirm the first trust is irrevocable and is governed by Arkansas law or has its principal place of administration in Arkansas (Ark. Code § 28-78-105).
☐ Confirm the trust is not held solely for charitable purposes (§ 28-78-103(b)).
☐ Determine whether the authorized fiduciary has expanded distributive discretion (§ 28-78-111) or limited distributive discretion (§ 28-78-112).
☐ Confirm the first-trust instrument does not expressly prohibit or restrict decanting (§ 28-78-103(c), § 28-78-115).
☐ Prepare the second-trust instrument and the schedule of changes (Part A, Schedule 1).
☐ Give notice in a record at least 60 days before exercise to every person listed in § 28-78-107(c).
☐ Confirm tax-sensitive provisions are preserved (§ 28-78-119).
☐ Execute the exercise by signed record identifying the first and second trusts (§ 28-78-110).
☐ File the optional court petition (Part B) only if instructions or approval are sought.

PART A — NOTICE OF EXERCISE OF DECANTING POWER (Ark. Code § 28-78-107)

NOTICE OF INTENDED EXERCISE OF THE DECANTING POWER

TO: Each settlor, qualified beneficiary, holder of a presently exercisable power of appointment, person with the right to remove or replace the authorized fiduciary, other fiduciary of the first trust, fiduciary of the second trust, and the Attorney General (if applicable), identified in Section 6 below.

FROM: [________________________________], Authorized Fiduciary (Trustee) of the First Trust.

DATE OF THIS NOTICE: [__/__/____]

PROPOSED EFFECTIVE DATE OF EXERCISE: [__/__/____] (not earlier than 60 days after this Notice is given, unless all persons entitled to notice waive the notice period in a signed record — § 28-78-107(f)).

1. THE FIRST TRUST

The First Trust is the [Name of First Trust], created by [________________________________] ("Settlor") under a trust instrument dated [__/__/____] (the "First-Trust Instrument"). A copy of the First-Trust Instrument and all amendments is enclosed (§ 28-78-107(e)(3)).

The First Trust is irrevocable. The Settlor is ☐ living ☐ deceased (died [__/__/____]).

Principal place of administration: [________________________________], Arkansas. Approximate value of trust property: $[__________] as of [__/__/____].

2. THE AUTHORIZED FIDUCIARY AND THE NATURE OF DISCRETION

The undersigned is the authorized fiduciary within the meaning of Ark. Code § 28-78-102(3) because the undersigned ☐ is a trustee ☐ is another fiduciary (not the settlor) ☐ is a special-needs fiduciary (§ 28-78-113), with discretion to distribute or direct distribution of part or all of the principal of the First Trust to one or more current beneficiaries.

The undersigned's distributive discretion is (check one):

☐ Expanded distributive discretion — not limited to an ascertainable or reasonably definite standard. The decanting power is exercised under Ark. Code § 28-78-111.

☐ Limited distributive discretion — limited to an ascertainable standard or a reasonably definite standard. The decanting power is exercised under Ark. Code § 28-78-112, and the second trust(s), in the aggregate, must grant each beneficiary of the First Trust beneficial interests that are substantially similar to that beneficiary's interests in the First Trust.

The governing discretionary distribution clause of the First-Trust Instrument reads:

"[Quote verbatim the discretionary distribution language from the First-Trust Instrument.]"

3. THE SECOND TRUST

The Second Trust is the [Name of Second Trust]. The Second Trust ☐ is a newly created trust ☐ is the First Trust as modified under the Decanting Act (§ 28-78-102(23)(A)) ☐ is an existing trust. A copy of each second-trust instrument is enclosed (§ 28-78-107(e)(4)).

Trustee(s) of the Second Trust:

4. MANNER OF EXERCISE (Ark. Code § 28-78-107(e)(1))

The authorized fiduciary intends to exercise the decanting power by appointing ☐ all ☐ the following portion of the principal of the First Trust to the Second Trust: [________________________________].

Reason for the proposed decanting: [________________________________________________].

The differences between the First Trust and the Second Trust are described in Schedule 1 below.

5. PROPERTY DISTRIBUTED / REMAINING (Ark. Code § 28-78-110)

Property of the First Trust to be distributed to the Second Trust: [________________________________].
Property, if any, that remains in the First Trust: [________________________________].

6. PERSONS GIVEN NOTICE (Ark. Code § 28-78-107(c))

The notice period runs from the day notice is given and ends 59 days after (§ 28-78-107(a)); exercise before it expires requires a signed waiver by all persons entitled to notice (§ 28-78-107(f)). Notice is not required to a qualified beneficiary who is a minor with no representative, or to a person not known or not locatable after reasonable diligence (§ 28-78-107(d)).

7. RIGHT TO OBJECT / APPLY TO COURT (Ark. Code § 28-78-109)

Any person entitled to notice may file an application under Ark. Code § 28-78-109 asserting that the exercise is ineffective, an abuse of discretion, or a breach of fiduciary duty.

SCHEDULE 1 — COMPARISON OF FIRST TRUST AND SECOND TRUST

TRUSTEE CERTIFICATION OF COMPLIANCE (Ark. Code §§ 28-78-111, 28-78-112, 28-78-115, 28-78-119)

The undersigned authorized fiduciary certifies that the proposed exercise of the decanting power:

☐ Is consistent with the fiduciary duties owed under § 28-78-104 and the purposes of the First Trust.
☐ Adds no person as a current, presumptive remainder, or successor beneficiary who is not a beneficiary of the First Trust (§ 28-78-111(c)) — except as expressly permitted for a beneficiary with a disability under § 28-78-113.
☐ Does not reduce or eliminate a vested interest (§ 28-78-111(c)(3)).
☐ Under limited distributive discretion, grants each beneficiary beneficial interests that are substantially similar to those in the First Trust (§ 28-78-112(c)).
☐ Is not prohibited or restricted by the First-Trust Instrument; any express prohibition or restriction is carried into the Second Trust (§ 28-78-115).
☐ Satisfies the applicable marital and charitable deduction, GST zero inclusion ratio, S-corporation shareholder, and qualified-benefits minimum distribution limits in § 28-78-119(b)(1)-(6).
☐ Any change between grantor and nongrantor trust status is permitted under § 28-78-119(b)(7), (9) and is not barred by a timely signed settlor objection under § 28-78-119(b)(10).
☐ Does not diminish any charitable interest, and notice has been given to the Attorney General where required (§ 28-78-114).

EXECUTION (Ark. Code § 28-78-110)

________________________________
[Authorized Fiduciary / Trustee Signature] Date: [__/__/____]

STATE OF ARKANSAS )
) ss.:
COUNTY OF [____________] )

This record was acknowledged before me on [__/__/____] by [________________________________] as authorized fiduciary of the [Name of First Trust].

________________________________
Notary Public, State of Arkansas
My commission expires: [__/__/____]

PART B — OPTIONAL PETITION TO THE COURT (Ark. Code § 28-78-109)

IN THE CIRCUIT COURT OF [________________________________] COUNTY, ARKANSAS
[PROBATE DIVISION]

Case No.: [________________________________]

PETITION FOR INSTRUCTIONS AND APPROVAL OF EXERCISE OF DECANTING POWER

Petitioner, as Trustee of the First Trust, states:

1. Parties. Petitioner is the authorized fiduciary of the [Name of First Trust]. The interested persons are the settlor (if living), the qualified beneficiaries, and the other persons entitled to notice under Ark. Code § 28-78-107(c).

2. Jurisdiction and venue. This Court has jurisdiction under Ark. Code §§ 28-73-201, 28-73-202, and 28-73-203, and venue is proper under § 28-73-204 because the First Trust's principal place of administration is in [____________] County, Arkansas.

3. The First Trust. The First Trust is irrevocable, was created by [____________] on [__/__/____], and is described in Part A. A copy is attached as Exhibit A.

4. Authority to decant. Petitioner has ☐ expanded (§ 28-78-111) ☐ limited (§ 28-78-112) distributive discretion and may exercise the decanting power.

5. The proposed decanting. Petitioner proposes to appoint ☐ all ☐ part of the First Trust principal to the Second Trust ([Name of Second Trust]), attached as Exhibit B, with the changes shown in Schedule 1 (Exhibit C).

6. Notice. Notice was given under Ark. Code § 28-78-107(c) on [__/__/____] (Exhibit D). ☐ No objection has been received. ☐ Objection(s) received: [____________].

7. Compliance. The proposed exercise complies with §§ 28-78-111/28-78-112, 28-78-115, and 28-78-119, and does not jeopardize tax-sensitive provisions, as certified in Part A.

WHEREFORE, Petitioner respectfully requests that the Court enter an Order under Ark. Code § 28-78-109:

A. Finding jurisdiction and proper venue;
B. Instructing that the proposed exercise of the decanting power is permitted under the Arkansas Uniform Trust Decanting Act and consistent with Petitioner's fiduciary duties;
C. Approving the exercise of the decanting power and the appointment of First-Trust property to the Second Trust;
D. ☐ Appointing a special fiduciary under § 28-78-109(a)(2), if requested;
E. Granting Petitioner fiduciary protection for acts taken in good-faith reliance on the Order (§ 28-78-106); and
F. Granting such other relief as is just and equitable.

VERIFICATION

I, [TRUSTEE-PETITIONER NAME], being duly sworn or affirmed, state that I am the Petitioner, that I have read this Petition, and that its factual statements are true and correct to the best of my knowledge and belief.

________________________________
[Trustee-Petitioner Signature] Date: [__/__/____]

State of Arkansas, County of [________________]

Subscribed and sworn to or affirmed before me by [TRUSTEE-PETITIONER NAME] on [__/__/____].

________________________________
Notary Public

My commission expires: [__/__/____]

[NOTARY SEAL]

________________________________
[Attorney Name], Arkansas Bar No. [____________]
[Firm, Address, Telephone, Email]
Attorney for Petitioner

EXHIBITS

• Exhibit A: First-Trust Instrument dated [__/__/____] and all amendments
• Exhibit B: Second-Trust Instrument(s)
• Exhibit C: Schedule 1 — comparison of First Trust and Second Trust
• Exhibit D: Notices given under Ark. Code § 28-78-107 and proofs of delivery
• Exhibit E: Signed waivers of the 60-day notice period (if obtained)
• Exhibit F: Tax analysis under Ark. Code § 28-78-119 (marital/charitable/GST/S-corp/grantor-trust)

ARKANSAS PRACTICE NOTES

• Two statutes — confirm which governs. The Arkansas Uniform Trust Decanting Act (Ark. Code § 28-78-101 et seq., Act 680 of 2025) took effect January 1, 2026 and is the comprehensive, UTDA-based regime used here. The earlier provision, Ark. Code § 28-73-818 (Act 293 of 2023), remains in the Arkansas Trust Code; it is a Nevada-style provision permitting appointment to a second trust limited to beneficiaries of the original trust and contains no statutory notice period. For exercises on or after January 1, 2026, Chapter 78 ordinarily controls.
• Nonjudicial by default. Under § 28-78-107(b), an authorized fiduciary may exercise the decanting power without consent and without court approval. Part B is optional.
• 60-day notice. § 28-78-107(c) requires notice in a record at least 60 days before exercise to the full list of recipients; exercise before the period expires requires a signed waiver by all persons entitled to notice (§ 28-78-107(f)).
• Two discretion tracks. Expanded discretion (§ 28-78-111) allows broader changes but may not add beneficiaries or reduce vested interests. Limited discretion (§ 28-78-112) requires substantially similar beneficial interests.
• Trust limitation on decanting. § 28-78-103(c) and § 28-78-115 — the trust instrument may restrict or prohibit decanting; a general no-amendment or spendthrift clause does not by itself block decanting.
• Tax limits. Section 28-78-119 protects specified marital and charitable deductions, GST treatment, S-corporation eligibility, and qualified-benefits distributions. Subsection (b)(9) permits a change between grantor and nongrantor status, subject to the foreign-grantor rule in (b)(7) and a timely signed settlor objection in the circumstances listed in (b)(10).
• Charitable interests. § 28-78-114 gives the Attorney General the rights of a qualified beneficiary and bars diminishing a charitable interest.

SOURCES AND REFERENCES

• Arkansas Uniform Trust Decanting Act, Ark. Code § 28-78-101 et seq. (Act 680 of 2025, HB1749, eff. Jan. 1, 2026) — Arkansas General Assembly, enrolled Act 680 of 2025 (official text): https://arkleg.state.ar.us/Home/FTPDocument?path=/ACTS/2025R/Public/ACT680.pdf ; bill page: https://arkleg.state.ar.us/Bills/Detail?id=hb1749&ddBienniumSession=2025%2F2025R
• Ark. Code § 28-73-818 (prior decanting provision; Act 293 of 2023) — Justia, https://law.justia.com/codes/arkansas/title-28/subtitle-5/chapter-73/subchapter-8/section-28-73-818/
• Arkansas Trust Code, Ark. Code §§ 28-73-101 et seq. (judicial proceedings, jurisdiction, venue, nonjudicial settlement agreements)
• Uniform Trust Decanting Act (2015), Uniform Law Commission
• 26 U.S.C. § 2642(c) (GST zero inclusion ratio); Treas. Reg. § 26.2601-1(b)(4) (grandfathered GST trust modifications)