The trust decanting meaning is simple to state and hard to apply: a trustee transfers assets from an existing trust into a new or different trust, so that the old instrument is replaced by terms that work better. Whether this is allowed, and how far it can go, depends on the trust deed, on the governing law and sometimes on a court. The entries below start with decanting itself, then cover the vocabulary you meet when comparing jurisdictions.
A
Administrative provisions
These are the clauses on how the trustee operates: investment powers, delegation, record keeping, accounting. They are the most common reason for a decanting, because old wording may not fit modern banking or reporting requirements.
AEOI (automatic exchange of information)
AEOI is the system under which financial institutions report accounts to the tax authorities of the account holder's country of residence. For trusts, it matters because a change of trustee or seat may change who reports, and what. The framework is called the CRS in its common form.
B
Beneficiaries
Beneficiaries are the persons or purposes for whose benefit the trustee holds the assets. In a decanting, their interests are the main limit: most regimes forbid a decanting that removes or reduces a vested interest without consent or court approval. Notice to beneficiaries is often part of the process.
C
Common-law seat
A common-law seat is a jurisdiction whose legal system includes trust law developed by courts, such as the equitable principles inherited from England. Decanting powers commonly originate there, either from case law or from statute. A civil-law seat treats the question differently; compare common-law and civil-law seats.
Conflict of laws
When a trust touches several countries, rules decide which law applies to the validity, administration and effects of the trust. A decanting can trigger such questions: the law that grants the power may differ from the law of the receiving trust.
CRS (Common Reporting Standard)
The CRS is the international standard behind AEOI. A trustee must establish the reporting status of the trust and its controlling persons, and a decanting into a new trust usually means that status has to be reassessed.
D
Decanting
Decanting is the transfer of some or all of the assets of one trust into another trust, using a power the trustee already holds. The new trust may fix an outdated administrative clause, change the governing law, extend the trustee's powers or separate one beneficiary's share. The power comes either from the trust deed, from a statute of the governing law, or from a court order. Without one of these, a trustee cannot simply rewrite the trust.
Discretionary trust
A discretionary trust leaves the trustee free to decide who among the beneficiaries receives income or capital, and when. Because the trustee already holds broad discretion, decanting is often easier to justify here than in a trust with fixed entitlements. The new terms still have to respect the purposes of the original trust.
Deed of appointment
A deed of appointment is the document by which a trustee or other holder of a power exercises it. In a decanting, it records the transfer of assets to the receiving trust and the terms on which they are held. Banks and registers usually ask for a copy.
Dynasty-style duration
Some trusts are drafted to last for many generations. Decanting is one way to move such a trust to a regime that still permits that duration, where the original seat has shortened its limits. See how duration limits differ by seat.
E
Equitable interest
An equitable interest is the right of a beneficiary to benefit from trust assets, as distinct from the legal title held by the trustee. Decanting moves legal title but must preserve equitable interests, unless the law or a court permits otherwise.
F
FinIA (LEFin / FINIG)
The Federal Act on Financial Institutions, known in French as LEFin and in German as FINIG, treats trustees as financial institutions. Under Art. 17 para. 2 FinIA, a trustee is anyone who professionally manages or disposes of a segregated estate under a trust deed within the meaning of the 1985 Hague Convention. A decanting into a Swiss trustee therefore involves a regulated professional.
FINMA
FINMA is the Swiss Financial Market Supervisory Authority. Under Art. 61 FinIA, trustees are subject to its supervision, which it exercises together with a supervisory organisation.
Fixed interest trust
In a fixed interest trust, each beneficiary's entitlement is set in the deed. Decanting is far more restricted here, because changing the terms may change someone's fixed right.
Flee clause
A flee clause allows or requires the trust to change its governing law or seat if specified events occur, such as political instability or a sanctions risk. It is a built-in alternative to a decanting. Read the dedicated entry on the flee clause.
Forced heirship
Forced heirship rules reserve part of an estate for certain relatives. Some seats protect trusts against such claims, others do not, and a decanting into a different seat can change the exposure. This protection has limits and depends on the facts.
G
Governing law
The governing law is the law chosen to regulate the trust. It determines whether a decanting power exists and on what conditions. It is not the same as the seat of administration; see governing law versus seat.
H
Hague Trusts Convention
The 1985 Hague Convention on the Law Applicable to Trusts and on their Recognition sets common rules for recognising trusts across member states. Switzerland recognises foreign trusts through it, which is why a decanting into or out of a Swiss trustee can be handled. A summary is in the Hague Trusts Convention explained.
I
Irrevocable trust
In an irrevocable trust, the settlor gives up the power to take back the assets. Decanting is mainly relevant here, since the settlor cannot amend the deed alone. The trustee's power becomes the practical route to change.
L
Letter of wishes
A letter of wishes is a non-binding note from the settlor guiding the trustee's discretion. A trustee considering a decanting will read it, because it shows the purpose the settlor had in mind.
M
Merger and division of trusts
Some laws allow several trusts to be merged, or one trust to be split into separate shares. These operations are related to decanting and often use the same powers. Each has its own consent and notice requirements.
N
Notice to beneficiaries
Many regimes require that beneficiaries be told before a decanting takes effect, and some let them object. The form and timing vary by law; no general rule fits every seat.
P
Power of appointment
A power of appointment lets its holder direct who receives trust property and on what terms. When a trustee holds a wide power over capital, it can be used to appoint assets into another trust, which is the legal basis of many decantings.
Proper law
The proper law of a trust is the law that governs it. See the entry on the proper law of a trust for how it is chosen and changed.
Protector
A protector is a person who oversees the trustee, often with the power to approve or veto certain acts. A deed may require protector consent for a decanting. Local rules on protectors differ; see protector and reserved powers law.
Purpose trust
A purpose trust has no beneficiaries in the usual sense and exists to pursue a stated aim. Decanting a purpose trust depends heavily on the statute of the seat.
R
Relocation of a trust
Relocation changes the seat or governing law of an existing trust, sometimes through a decanting and sometimes through a change of trustee and proper law. The legal mechanics are described in moving a trust between jurisdictions.
Reserved powers
Reserved powers are powers the settlor keeps over the trust, such as to remove the trustee. Too many reserved powers can undermine the trust's recognition, and they can affect who has to agree to a decanting.
Revocable trust
A revocable trust can be changed or ended by the settlor. Decanting is rarely needed there, since the settlor can amend the deed directly while alive.
Rule against perpetuities
This rule limits how long a trust may last. Where it applies, a decanting cannot normally be used to extend a trust beyond the permitted period, unless the law of the receiving seat allows it.
S
Seat of administration
The seat is the place where the trust is administered. It affects courts, regulation, banking relationships and reporting. Choosing it is a topic of its own; the guide on Switzerland as a trust seat sets out strengths and limits.
Settlor
The settlor, also called constituant in French or Errichter in German, creates the trust and transfers assets to it. After the transfer, the settlor's role depends on the type of trust and the powers reserved.
Situs
Situs is the place where an asset is located. It matters because land and some other property follow the rules of the place where they are, whatever the governing law of the trust.
STAR trust
A STAR trust is a form of purpose-oriented trust created under the law of one particular seat, allowing purposes and beneficiaries together. Its decanting follows its own statute.
Supervisory organisation
In Switzerland, a supervisory organisation (organisme de surveillance) authorised by FINMA carries out the ongoing supervision of trustees. Its role is part of what a receiving trustee will explain when a trust is moved.
T
Trust deed
The trust deed, or acte de trust, is the instrument that creates the trust and sets out the trustee's powers. It is the first document to read when asking whether a decanting is possible.
Trustee
The trustee holds legal title and administers the assets for the beneficiaries or the stated purpose. Under Art. 19 para. 2 FinIA, a Swiss trustee manages the segregated estate, maintains its value and uses it according to its purpose.
V
VISTA trust
A VISTA trust is a structure from a specific seat that limits a trustee's duty to monitor a company held in the trust. It is used for family businesses. Read more in the entry on the VISTA trust.
W
Winding up
Winding up is the closing of a trust, with final distributions. Decanting is sometimes an alternative to winding up, since assets continue in a new trust. The exit rules differ by seat; see winding up and exit by seat.
Frequently asked questions
What is the trust decanting meaning in plain terms?
It means moving the assets of one trust into another trust, using a power the trustee already has, in order to change terms that no longer work. The old trust is emptied, and the new one governs the assets from then on.
Can any trustee decant a trust?
No. The power must come from the trust deed, from a statute of the governing law or from a court. Many trust deeds say nothing, and some laws have no decanting rules at all. This is why the governing law is the first question.
Is decanting the same as changing the seat?
Not necessarily. Decanting changes the instrument holding the assets; a change of seat changes where the trust is administered. They are often combined, but each has separate legal conditions. A confidential individual assessment is needed to know which route applies.
Sources
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