Section 42 Subsection 1

• Library: Trust and Estate Legislation 2012

Unless the terms of the trust instrument expressly provide otherwise, a trustee who has discretionary power under the terms of a trust to make a distribution of income or principal, whether or not limited by an ascertainable standard, to or for the benefit of one or more beneficiaries of a trust, the first trust, may instead exercise such discretionary power by appointing all or part of the income or principal subject to such discretionary power in favor of a trustee of a second trust, the second trust, created under either the same or different trust instrument in the event that the trustee of the first trust decides that the appointment is necessary or desirable after taking into account the terms and purposes of the first trust, the terms and purposes of the second trust, and the consequences of the distribution.

Section 456.4-419.1, RSMo Supp. 2011.

This provision sets out a trustee’s general authority to decant. In short, it authorizes a trustee who has discretionary power over what the statute calls the “first trust” to appoint the trust property (i.e., to decant it) to

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what it calls a “second trust.” The qualifiers in this one long sentence that makes up § 456.4-419.1—and there are many—impose a variety of restrictions and conditions. Below is a discussion of the text of subsection 1 with the text from the statute broken out and italicized followed by the related discussion.

“Unless the terms of the trust instrument expressly provide otherwise,”:

A trustee may not decant if the trust terms expressly prohibit the trustee from so doing. Therefore, while the decanting power is the default rule, a settlor is able, if the settlor wishes, to “draft around” that possibility by including an express prohibition.

“a trustee who has discretionary power under the terms of a trust to make a distribution of income or principal,”:

Missouri allows decanting by a trustee who is granted, by the first trust instrument, discretion over either income or principal. Put differently, only a trustee who has such distributive authority may decant. The disjunctive “or” between “income” and “principal” is noteworthy because only Missouri and South Dakota allow the decanting of
a trust if either the trust income or the principal is subject to discretionary distribution. This phrase is also important because it sets the outside limits on what can be decanted. That is to say, a trustee may decant only the property that the trustee has the discretion to distribute; only that...