Decanting Trusts in Pennsylvania: Modifying Irrevocable Trusts

“Decanting” a trust means distributing assets from one irrevocable trust into a new trust with different terms; like pouring wine from one bottle into another. It’s one of several tools Pennsylvania law provides for modifying irrevocable trusts that no longer serve their intended purpose.

Unlike some states, Pennsylvania does not have a specific “decanting statute.” Instead, it relies on the Uniform Trust Code’s comprehensive modification provisions (20 Pa.C.S. §§ 7740 to 7740.8), which accomplish the same goals, and in some cases provide even more flexibility.

Modification by Consent (§ 7740.1)

Settlor + all beneficiaries: A noncharitable irrevocable trust can be modified or terminated with the consent of the settlor and all beneficiaries, even if the modification is inconsistent with a material purpose. This is the broadest authority, if everyone agrees, almost anything goes.

All beneficiaries only: Without the settlor, all beneficiaries can modify the trust if the court finds the modification is not inconsistent with a material purpose. They can terminate the trust if the court finds continuance is not necessary to achieve any material purpose. Note that a spendthrift provision is presumed to be a material purpose (§ 7740.1(b.1)).

Some beneficiaries: If not all beneficiaries consent, the court may still approve if the non-consenting beneficiaries’ interests will be adequately protected (§ 7740.1(d)).

Judicial Modification (§ 7740.2)

Even without any beneficiary consent, the court can modify an irrevocable trust if:

• Unanticipated circumstances: The court may modify dispositive or administrative provisions if circumstances apparently not anticipated by the settlor make modification necessary to further the trust’s purposes. The modification must approximate the settlor’s probable intention.
• Impracticable administration: The court may modify administrative provisions if adherence would be impracticable, wasteful, or impair administration.

Changes in tax law are a common basis for modification under § 7740.6, which specifically authorizes modification to achieve the settlor’s tax objectives; a provision that became particularly relevant after the SECURE Act upended retirement trust planning.

Division and Combination (§§ 7740.7, 7740.8)

A trustee may, without court approval, divide a trust into two or more separate trusts or combine two or more trusts into a single trust, as long as the division or combination does not impair the rights of any beneficiary or adversely affect achievement of the trust’s purposes. This is useful for tax planning, separating beneficiaries with different needs, or simplifying administration.

Nonjudicial Settlement Agreements (§ 7710.1)

Interested persons can enter into binding agreements to resolve matters involving a trust without court approval, as long as the agreement does not violate a material purpose of the trust and includes terms that a court could properly approve. This is a powerful and underutilized tool for modifying trust terms by agreement among the relevant parties.

When Modification Is Needed

• The trust was drafted before the SECURE Act and names a trust as retirement account beneficiary
• Tax law changes have made the trust’s structure counterproductive
• A beneficiary has become disabled and needs the trust converted to a special needs trust
• The trustee provisions are inadequate (no successor named, or the named successor can’t serve)
• Family circumstances have changed dramatically (divorce, estrangement, death of a beneficiary)
• The trust is too small to justify continued administration

Statutory content on this page was last verified against Pennsylvania statutes (20 Pa.C.S.; 72 P.S. Art. XXI): February 2026 . If you are reading this significantly after that date, confirm key provisions with current statute text or contact our office.