After a year as eventful as 2020, it’s no surprise that you might need to update your estate planning documents in 2021, including your trust. However, trusts are not always easy to amend, and some types of trusts actually can’t be amended at all.
If you’re looking to make changes to your trust, here’s what you need to know.
Revocable and Irrevocable Trusts
Trusts can either be revocable or irrevocable, depending on their terms and when they go into effect.
- Revocable trusts, also known as living trusts, go into effect immediately during the life of the Grantor (the creator of the trust), who is also the primary beneficiary. These trusts can be amended throughout the Grantor’s lifetime as necessary. This trust governs your assets during your lifetime, dictates who will receive those assets when you pass away and permits those assets placed in trust prior to your death to pass outside of probate. After the Grantor passes away, this trust then becomes irrevocable since the Grantor is no longer able to change the trust. At this point, the trust may still be amendable under certain circumstances.
- Irrevocable trusts can be created during life or created in a will, in which case they do not become effective until after the Grantor passes away. Irrevocable trusts that are created in a will are often referred to as “testamentary trusts.” As the name indicates, irrevocable trusts are more difficult to amend or revoke, and doing so usually requires a court order.
How Do I Amend My Trust?
There are many reasons that a grantor, trustee, or beneficiary may want to change the terms of a trust, including changing family dynamics, the passing of loved ones, tax law changes, etc.
When amending a revocable trust, you must comply with the requirements of the state law that governs your trust. This is why it is so important to meet with an estate planning attorney! This will ensure that you are meeting the legal requirements for amending your trust without compromising the validity of the changes you want to make.
It may be possible to amend an irrevocable trust if you have the consent of the grantor and the beneficiaries, and this depends on the laws of your state of residence. Again, seeking the help of an estate planning attorney is the best way to make sure you are complying with state-specific requirements.
If you believe your or your loved one’s trust is being poorly administered, you may need to take legal action. Contact us today for a consultation.
