Having a living trust means you know the importance of planning for your and your family’s future. However, since major life events can occur no matter how well you plan, you may want to change the trust to accommodate your new desires or keep your trust current. Doing so is usually straightforward, but it can become complex, depending on what type of trust you create.
There are two major roles in a trust: the grantor, who creates the trust and then appoints the trustee, who at one point manages the assets in the trust. Also known as a living trust, the grantor decides what assets are in the trust and transfers the title of those assets to the trust. The trustee then distributes the assets to the grantor’s named beneficiaries at the time of the grantor’s death and does so according to the grantor’s wishes.
A trust allows your family or beneficiaries to avoid the lengthy and sometimes expensive probate process after your death. There are two general types of trusts:
- Irrevocable trust: A irrevocable trust is just that; it cannot be changed or reversed and is generally final. The benefits of having an irrevocable trust are that any income earned in the trust is not taxable to the grantor, and creditors cannot access the funds. The grantor, though, relinquishes their authority to manage those funds.
- Revocable trust: The more common of the two types, a revocable trust can be changed and modified. As the grantor, you create the trust, but you are also the trustee with the authority to manage the assets. This is because the grantor still owns the property in the trust and is taxed on any trust income.
Making changes to a revocable trust can be done without going to court. It can be done by using living trust forms found online, a third-party service, or with the help of an attorney. Here are a few steps to amending a living trust:
- Online trust forms: If you use an online service to create a trust, you can likely find a form from the same service where you can change it.
- Be transparent: You want to be clear and concise in your changes so the trustee understands how to distribute the assets. You must specify the name, the date, and whether you add or delete the trust.
- Specific language: It is important to specify on the trust whether the amendment you are making adds to the trust or replaces something so that the trustee carries out your wishes correctly.
- Notarize: Sign the amendment in the presence of a notary. Your signatures should be notarized if it is a joint trust with your spouse.
- Keep it safe: Attach your notarized amendment form to the original trust document and keep it in a safe place but easy for your trustee to access. You can store it with the online service you used or in your lawyer’s office. If you keep your trust in a safe deposit box, be sure to transfer the safe deposit box to the trust.
- Restatement of trust: A restatement of trust does not revoke the original trust but is used mostly when many changes have to be made to the trust. It essentially rewrites the trust with the original property but with the new changes.
- Revoke trust: If you have many changes to be made to a trust, it may be best to revoke it entirely. An estate planning attorney can help you with the best option.
How Can I Amend an Irrevocable Trust?
It can be quite challenging to make changes to an irrevocable trust, but it is not impossible, particularly if you have the help of an attorney. There are a few things you can try:
- Remove the assets: You can remove all the assets in a trust, essentially terminating it. But the trust will still exist, just with zero assets.
- Power of appointment: If a trustee is given lifetime power to make changes to the trust, they can do so through their “power of appointment,” whose terms of this role are designated by the grantor.
- Trust protector: A “trust protector” is an independent third party appointed by the trustee or the court to review a proposed change and decide whether to make the change.
- Trustee modifications: An irrevocable trust may have instructions for the trustee or beneficiary to change the trust, such as when the federal tax law changes.
Media Wills and Estates Lawyers at Eckell Sparks Help Grantors and Trustees Make Changes to Living Trusts
Handling a trust can be difficult and time-consuming, especially when you have many assets. If you need to make changes, speak with our Media wills and estates lawyers at Eckell, Sparks, Levy, Auerbach, Monte, Sloane, Matthews & Auslander, P.C. Call us at 610-565-3701 or fill out our online form for an initial consultation. Located in Media and West Chester, Pennsylvania, we proudly serve clients in Delaware County, Chester County, and Montgomery County.