Trust Decanting in Florida for Disabled and Elderly Beneficiaries

Trust decanting lets a trustee move assets out of an irrevocable trust that is causing a problem and into a new trust with better terms. In Florida it is governed by Florida Statutes Section 736.04117, and subsection (4) specifically permits decanting into a supplemental needs trust for a beneficiary with a disability. It requires no court approval, only 60 days written notice to qualified beneficiaries, which can be waived in writing. When the original trust came from a parent or grandparent rather than the beneficiary, the new trust carries no Medicaid payback, so whatever remains at the beneficiary's death goes to family rather than the state. For a family holding an inherited trust that is about to cost someone their benefits, that combination is unusually favorable.

When a loved one passes away and leaves behind an irrevocable trust, families sometimes face an unexpected problem. The trust that was meant to provide for a beneficiary might be the very thing preventing them from getting vital government benefits. Decanting is often the answer.

What Is Trust Decanting?

Think of trust decanting like pouring wine from one bottle into another. You are transferring assets from one trust into a different trust with better terms. The process lets a trustee move assets from an existing irrevocable trust into a newly created trust that better serves the beneficiary's current needs. It is one of several types of trusts strategies available when circumstances change after a trust is written.

Decanting is not the same as amending a trust. An irrevocable trust generally cannot be amended, which is the whole point of the word irrevocable. Decanting works around that by treating the trustee's discretionary power to distribute principal as broad enough to distribute it into a new trust instead of outright. If you are dealing with a revocable trust that simply needs updating, a trust restatement is the simpler tool.

When Does Trust Decanting Become Necessary?

Here is a common scenario. A parent or grandparent creates a revocable living trust during their lifetime. After they pass away, that trust becomes irrevocable and distributes assets to multiple beneficiaries. Everything seems fine until one beneficiary needs government assistance, perhaps because they have become disabled, or because they are elderly and need help covering home care, assisted living, or nursing home costs.

The problem is that many trusts were not written with disability or long-term care needs in mind. If the original trust gives the trustee broad discretion to spend money on the beneficiary's health, maintenance, and welfare, Medicaid will count those trust assets as available to the beneficiary. That can disqualify them from the benefits they need. Given that nursing home care in Florida averages roughly $10,645 per month, an inherited trust that blocks eligibility can drain itself in a couple of years.

How Florida Law Makes Decanting Possible

The statute

Florida has recognized a trustee's common law authority to decant since 1940, and the Legislature codified it into the Florida Trust Code in 2007 as Section 736.04117. The Legislature amended the provision in 2018 to align Florida with the Uniform Trust Decanting Act, which broadened the opportunity considerably. Subsection (4) is the one that matters here. It allows an authorized trustee with power to distribute principal for the benefit of a beneficiary with a disability to exercise that power by decanting into a supplemental needs trust.

A point the general guidance often gets wrong

You will often see it said that the trustee needs broad or absolute discretion to decant for a disabled beneficiary. Subsection (4) is more generous than that. It permits decanting where the trustee's power is either absolute or limited by an ascertainable standard, meaning the familiar health, education, maintenance, and support language. A trustee holding only HEMS power should not assume the door is closed.

The new trust is an irrevocable special needs trust, also called a third party special needs trust. That type of trust is designed to hold assets for a disabled beneficiary without interfering with eligibility for needs-based programs such as the Medicaid waiver or the Medicaid Institutional Care Program.

Who counts as an authorized trustee

Not everyone holding the title of trustee can decant. Under Florida law an authorized trustee is any trustee other than the settlor or a beneficiary. If the person serving as trustee is also a beneficiary of the trust, which happens often in family trusts, that person cannot exercise the decanting power and someone else will need to act.

The 2025 clarification

A useful development for families considering this now. Senate Bill 262, chapter 2025-159, clarified that an authorized trustee who creates the second trust instrument is not treated as the settlor of that second trust. Before this, some practitioners hesitated to decant out of concern that a trustee who drafted the new document could be deemed its settlor, which would disqualify them from serving as trustee of the new trust. That concern has been resolved.

The Advantages of Trust Decanting for Florida Families

No court involvement required

Unlike some other trust modification methods, decanting does not require judicial approval. The trustee acts on the authority the statute grants. Trustees may still seek judicial guidance voluntarily if a situation is contested or unusually complex, but it is not a prerequisite.

Preserves asset protection

Once assets are moved into a properly structured special needs trust, they do not count against the beneficiary in determining Medicaid eligibility. Your loved one can receive the care they need without depleting the inheritance left to them.

No Medicaid payback requirement

This is the advantage families most often miss. Because the trust originates from a parent or grandparent rather than from the beneficiary's own money, the new trust does not need a Medicaid estate recovery provision. When the beneficiary eventually passes away, remaining trust assets can go to other family members rather than reimbursing the state. A first party trust funded with the beneficiary's own assets would carry that payback. This one does not.

Protects substantial assets

Whether the trust holds $50,000 or $500,000, decanting lets families shield meaningful resources while still ensuring their loved one receives quality care at home or in a facility.

The Decanting Process in Florida

Decanting is straightforward compared to other trust modification methods, but it requires careful execution.

1. Trustee authority. The trustee must be an authorized trustee, meaning not the settlor and not a beneficiary, and must hold power to distribute principal to the disabled beneficiary, whether that power is absolute or limited by an ascertainable standard.
2. Notification. The trustee must provide 60 days written notice to all qualified beneficiaries, and in certain cases to the settlor of the first trust. Qualified beneficiaries includes more than the people named outright in the trust, since contingent beneficiaries may also hold an interest. The notice is satisfied by providing the proposed instrument exercising the power, the first trust instrument, and the proposed second trust instrument. The notice period can be waived in writing, which lets a trustee act immediately when time is short.
3. Proper drafting. The new special needs trust must be written to comply with both federal Medicaid rules and Florida law, so the assets are genuinely protected and eligibility is preserved.
4. Documentation. The exercise must be in a signed written instrument filed with the records of the first trust, and the whole process documented to show it was done correctly. Keep records of every notice sent and received, since that paperwork is what protects the trustee from a later claim of procedural error.

The 60 day notice does not limit any beneficiary's right to object. It gives interested parties a window to review the proposed changes and raise concerns before the decanting takes effect.

Who Benefits from Trust Decanting?

• Disabled beneficiaries who need to qualify for Medicaid waiver programs that pay for services and supports in the community
• Elderly beneficiaries who need long-term care but cannot absorb the cost of a nursing home or assisted living facility in Florida
• Families who want to preserve an inheritance while ensuring their loved one receives proper care
• Trustees who want to fulfill their duty to act in the beneficiary's best interest when circumstances have changed since the trust was created

When Should You Consider Trust Decanting?

Any of these situations is worth a conversation.

• You are the trustee of an irrevocable trust and a beneficiary has become disabled or elderly and needs government benefits
• A loved one has been told they have too many assets to qualify for Medicaid
• You are concerned that a trust you inherited might prevent you from getting the care you need
• You want a family member with special needs to receive their inheritance without losing vital benefits

Why This Is Not a Do It Yourself Project

Trust decanting involves both trust law and Medicaid planning, two technical areas that vary significantly from state to state. Florida's statute provides favorable opportunities, but only when the process is handled correctly. Choosing the wrong subsection or failing to satisfy the statutory criteria can expose the trustee to personal liability. An attorney who focuses on elder law and Medicaid planning can review the original trust to determine whether decanting is available, draft a special needs trust that protects eligibility, handle notice to all qualified beneficiaries, make sure the documentation meets statutory requirements, and coordinate the transfer of assets.

Key Takeaways

• Decanting moves assets from a problem irrevocable trust into a better one under Fla. Stat. 736.04117, with no court approval needed.
• Subsection (4) allows decanting into a supplemental needs trust for a disabled beneficiary, and works whether the trustee holds absolute or HEMS power.
• An authorized trustee is any trustee other than the settlor or a beneficiary, so a trustee who is also a beneficiary cannot decant.
• Sixty days written notice to qualified beneficiaries is required, and it can be waived in writing when time is short.
• Because the money came from a parent or grandparent rather than the beneficiary, the new trust carries no Medicaid payback.
• SB 262 in 2025 confirmed that a trustee who drafts the second trust is not its settlor, removing a concern that had discouraged decanting.

Frequently Asked Questions

Q. Does trust decanting require going to court in Florida?

A. No. Under Florida Statutes Section 736.04117 no court approval is required. The trustee acts on statutory authority after giving the required notice. A trustee may still choose to seek judicial guidance voluntarily, particularly where a beneficiary is likely to object or the trust terms are ambiguous.

Q. Can a trustee decant if they only have HEMS discretion rather than absolute power?

A. Yes, for a disabled beneficiary. Subsection (4) permits decanting to a supplemental needs trust where the trustee's power is either absolute or limited by an ascertainable standard such as health, education, maintenance, and support. The scope of permissible changes differs between the two, but a HEMS trustee is not shut out.

Q. Will the new trust have to pay Medicaid back when the beneficiary dies?

A. Not if the original trust was funded by a parent, grandparent, or someone other than the beneficiary. A third party special needs trust carries no Medicaid payback, so remaining assets pass to family. A first party trust funded with the beneficiary's own money would require payback.

Q. How long does the decanting notice period last?

A. Sixty days written notice to all qualified beneficiaries, and in certain cases the settlor of the first trust. The notice must include the proposed instrument, the first trust, and the proposed second trust. Qualified beneficiaries can waive the notice period in writing, which allows the trustee to act immediately when a Medicaid application cannot wait.

Q. Can I decant a trust where I am both the trustee and a beneficiary?

A. No. Florida defines an authorized trustee as any trustee other than the settlor or a beneficiary. If you serve in both roles, someone else must exercise the decanting power. This catches many family trusts, where a child often serves as trustee while also being named a beneficiary.

Q. What is the difference between decanting and restating a trust?

A. Restatement applies to a revocable trust, where the settlor is alive and can rewrite the terms. Decanting applies to an irrevocable trust, usually after the settlor has died, and is exercised by the trustee rather than the settlor. Different tools for different problems.

A Trust That Blocks Benefits Is Not a Dead End

If you are anywhere in Florida and dealing with an irrevocable trust that is causing problems for a disabled or elderly beneficiary, you do not have to let valuable assets go to waste or watch a loved one go without needed care. Decanting often lets a family have it both ways, preserving the inheritance while opening access to benefits. The catch is that it turns on the exact language of the trust you already have, which is why the first step is simply getting the document in front of someone who can measure it against the statute. Gather the original trust instrument, any amendments, a list of everyone named as a beneficiary including contingent beneficiaries, and a note on what benefits the person needs and when. Our Florida elder law and estate planning attorneys will tell you whether subsection (4) is available on your facts and what the notice will require. To find out where your family stands, schedule a consultation with our team.

This article provides general information about trust decanting in Florida and should not be considered legal advice. Every family's situation is unique, and trust modification involves technical legal requirements that must be tailored to your specific circumstances.