## Facts

- A settlor created a Massachusetts-governed irrevocable trust in 1983 for the sole benefit of his son, naming trustees with broad discretion to distribute income and principal or “segregate irrevocably” assets for the beneficiary.
- The trust also granted the beneficiary an increasing, age-based unilateral withdrawal right; at the relevant time, he could withdraw up to 75% of principal but had not exercised that right.
- During the beneficiary’s Connecticut divorce, and without the beneficiary’s prior knowledge or consent, the trustees transferred substantially all trust assets into a newly created 2011 trust for the same beneficiary.
- The 2011 trust included spendthrift protections and eliminated the beneficiary’s unilateral withdrawal power, leaving distributions entirely to trustee discretion.
- In Connecticut litigation, the divorce opponent challenged the transfer as invalid and alleged fiduciary breaches; the Connecticut trial court ruled the beneficiary’s withdrawal interest was vested and that the trustees lacked authority to transfer those assets.
- The Connecticut Supreme Court certified questions of Massachusetts trust law to the Massachusetts Supreme Judicial Court because the original trust specified Massachusetts law.

## Issues

1. Whether Massachusetts common law and the 1983 trust instrument authorized the trustees to “decant” substantially all assets into a new trust for the same beneficiary.
2. Whether the trustees could decant in a manner that eliminated the beneficiary’s unexercised withdrawal right.
3. Whether the validity of decanting depended on the beneficiary’s knowledge or consent.
4. Whether the decanting was consistent with the settlor’s intent expressed in the 1983 trust.

## Decision

- The court answered that the trustees had authority, under Massachusetts common law and the 1983 trust’s broad discretionary language, to decant substantially all assets into a new trust for the same beneficiary.
- The court concluded the trustees could decant even though the new trust eliminated the beneficiary’s unexercised withdrawal right.
- The court held beneficiary knowledge or consent was not required where the trust instrument did not condition trustee action on beneficiary approval.
- The court determined the decanting was consistent with settlor intent to benefit the sole beneficiary and protect trust assets, including through spendthrift-style protections.

## Legal Principles

- Under Massachusetts common law, a trustee’s broad discretionary power to distribute or set aside principal and income for a beneficiary can include authority to transfer assets into a further trust for that beneficiary (decanting), absent a contrary limitation in the instrument.
- A beneficiary’s fixed withdrawal right does not necessarily extinguish or limit trustees’ independent discretionary powers unless the instrument expressly makes trustee authority subordinate to, or terminated by, the withdrawal right.
- Trustees may act before a beneficiary exercises a withdrawal power; an unexercised withdrawal right does not by itself prevent the trustees from exercising their discretionary distribution/segregation authority.
- Decanting does not require beneficiary consent unless the trust instrument imposes such a requirement; a beneficiary holds only the rights granted by the trust and does not gain trustee-like control by virtue of being a beneficiary.
- Settlor intent, as shown by the trust’s structure and grant of discretion, may support trustee action designed to preserve assets for the beneficiary and reduce exposure to creditor-like claims.

## Conclusion

The Massachusetts Supreme Judicial Court concluded that trustees granted expansive discretionary authority in a Massachusetts-governed trust may decant assets into a new trust for the same beneficiary, without the beneficiary’s consent, even if the new trust removes an unexercised withdrawal right, where the instrument indicates a protective purpose focused on the beneficiary’s sole benefit.


Ferri v. Powell-Ferri, 476 Mass. 651, 72 N.E.3d 541 (Mass. 2017)