Tennessee adopted its decanting statute in 2004 and made improvements to the statute in 2013. Decanting has allowed many of our clients to improve troublesome provisions contained in prior trust agreements. There are now 22 states that have adopted decanting statutes. I predict that all states will adopt some version of decanting within the next 10 years.
Steve Oshins has compiled a ranking of the decanting statutes. Tennessee ranks 5th on his list. Two of the three areas where Tennessee loses points are misleading. Tennessee does allow a trust with an ascertainable standard to be decanted into a discretionary trust. Mr. Oshins correctly points that our statute does not allow a mandatory income interest to be removed. We included this prohibition in the statute due to a concern that eliminating a mandatory income interest might create adverse income, gift, and generation-skipping tax results.
Attached is a decanting paper I presented last year when there were only 18 states that allowed decanting.