An irrevocable trust has long been known to be challenging to change, even if it is the trustee wanting to do the changing, but they are still used because of the tax advantage. Decanting a trust provides one solution by letting the trustee move the assets from the old trust to a new one and change some terms at the same time. It is called decanting because the person is "pouring" from one trust to another.
Twenty-one states currently have laws governing the decanting of trusts, and a model law is being created that would make it easy for other states to allow for decanting as well. This may eventually create a uniform decanting law across most of the country, as states that already have decanting laws in place may decide to alter them to fit with the model.
Decanting is also cost effective for the trustee, who does not have to go to court or deal with any unwanted publicity. Because the decanting is not done in court, it normally costs less than $10,000. Decanting a trust, however, does not create a free for all. The already-vested interests of the trust must stay the same, for example.
It is also important to understand that each state has its own laws about trust decanting, and just because you read about someone being able to change one aspect of a trust in another state does not mean it's possible in every situation. The IRS may finally be releasing guidelines on taxes and trust decanting some time in 2014, so getting legal and tax advice before going through the process is important to make sure that everything is done in the best interests of all of involved.
Source: The Wall Street Journal, "When to 'Decant' a Trust" Liz Moyer, Jan. 03, 2014