## Facts

- In 1992, Moses Ratowsky created an inter vivos trust for his grandson, Daniel Schreiber, naming Rachel Schreiber and Alan D. Kroll as co-trustees.
- The trust provided discretionary distributions until Daniel turned 21; at 21, Daniel would be entitled to trust income and could withdraw principal, effectively giving him access to the corpus.
- Daniel developed disabilities and received Medicaid and Supplemental Security Income (SSI).
- The trustees concluded that Daniel’s impending right to withdraw principal at age 21 would make the trust corpus an available resource and jeopardize Medicaid/SSI eligibility.
- Six days before Daniel’s 21st birthday, an instrument was executed purporting to appoint (decant) the invaded trust’s assets into a newly created third-party supplemental needs trust (SNT) for Daniel.
- The SNT was designed to pay for Daniel’s supplemental needs while preserving public benefits and provided remainder dispositions to Daniel’s issue, or if none, to his siblings.
- Alan D. Kroll commenced a special proceeding seeking court approval of the decanting under EPTL 10-6.6(j)(1).
- A guardian ad litem supported approval; the New York Attorney General, appearing for the New York State Department of Health (DOH), objected.

## Issues

1. Whether the trustee who executed the appointment qualified as an “authorized trustee” under EPTL 10-6.6 and therefore had statutory authority to decant the invaded trust into a new trust.
2. When a decanting under EPTL 10-6.6 becomes effective, and whether execution shortly before the beneficiary’s 21st birthday was timely to prevent vesting of withdrawal rights that would defeat the decanting’s purpose.

## Decision

- The court granted the petition, approved the exercise of the power of appointment, and dismissed DOH’s objections.
- The court held the trustee was an “authorized trustee” under EPTL 10-6.6, given the trustees’ discretionary distribution authority at the time the appointment was made.
- The court held the decanting was effective before Daniel’s age-21 rights to mandatory income and principal withdrawal would arise, permitting the assets to be held in the SNT structure.

## Legal Principles

- Under EPTL 10-6.6 (as amended in 2011), a trustee may qualify as an “authorized trustee” and decant trust assets by appointing them to a new trust when statutory conditions are met.
- The availability and scope of the trustee’s discretionary authority at the time of the appointment governs whether decanting authority may be exercised.
- A decanting may be upheld when executed before a beneficiary’s withdrawal rights or mandatory distribution rights vest, so long as statutory requirements for the appointment are satisfied.
- Decanting may be used to restructure an existing trust into a third-party supplemental needs trust to support a disabled beneficiary without unnecessarily endangering Medicaid/SSI eligibility, provided the restructuring complies with EPTL 10-6.6’s limits on impairing beneficiaries’ interests.

## Conclusion

The Surrogate’s Court approved decanting of an inter vivos trust into a third-party supplemental needs trust under EPTL 10-6.6, rejecting objections that the trustee lacked authority or acted too late, and held the appointment effective before the beneficiary’s age-21 withdrawal rights would have arisen, thereby preserving eligibility for means-tested benefits.


Matter of Kroll (Ratowsky-Schreiber), 971 N.Y.S.2d 863 (Sur. Ct. Nassau Cty. 2013)