A well thought out estate plan typically includes a variety of legal documents in addition to a Last Will and Testament. Trust agreements are frequently among those additional documents due in large part to the flexibility offered by a trust and the multitude of estate planning objectives that can be fulfilled by creating a trust. One frequently asked question regarding trusts is “ Do I need to change my trust when I buy or sell assets? ” The answer depends on the type of trust you created and the type of asset you buy or sell.
While there are a wide variety of specialty trusts that can be included in your estate plan, all trust can be divided into one of two categories – revocable or irrevocable. As the name implies, if you have created an irrevocable trust you cannot make any changes to the trust once it becomes effective. This does not mean that assets cannot be bought or sold by the trust itself as long as the terms of the trust agreement allow for the sale or purchase of assets. You, however, can no longer remove assets from the trust.
If you have created a revocable trust, you may add or remove assets to the trust anytime you wish. Whether or not this requires a change to the trust agreement depends on the original trust agreement. As a general rule, a well drafted trust agreement will allow for the addition of assets to the trust and/or the removal of assets from the trust by the trust maker without the need to actually change the trust agreement itself.
This, however, is a perfect example of why it is important to work closely with an experienced Illinois estate planning attorney when creating your estate plan. The terms of a trust agreement dictate how the trust is managed, how distributions are made, and other things such as the addition or removal of rust assets. Spending the time and money now to ensure that the trust agreement you create reflects your intent and purpose and provides the flexibility you need for the future is undoubtedly a wise investment. Conversely, saving money now by using a “fill in the blank” trust agreement form will likely result in considerable expense down the road if the trust doesn’t function as intended.
Consult with an Illinois estate planning attorney if you have specific questions regarding trust agreements or estate planning in general.
- My Parent/Spouse Shows Early Signs of Dementia. Can We Still Do Medicaid Planning? - July 20, 2015
- What Happens to a Living Trust When One Spouse Dies? - July 13, 2015
- Medicaid Spousal Impoverishment Rules - July 7, 2015