A living trust is one of the most common estate planning tools. In fact, living trusts have evolved to the point where there are few estate planning goals that cannot be furthered using a living trust. One of the advantages to using a living trust to distribute assets is the fact that you can make changes to the trust, if you create the right type of living trust. To help broaden your knowledge, the living trust lawyers at Nash Bean Ford & Brown, LLP explain how to make changes to a living trust.
What Might You Want to Change?
Wanting to change something in a trust is fairly common. After all, a trust may be in place for your entire life during which time you will go through numerous changes yourself. Some of the most common reasons to make a change to a trust agreement include:
- Trustee – the Trustee is responsible for administering the trust. If the Trustee becomes unwilling or unable to serve, you need a new Trustee. You may also simply decide you want to replace the current Trustee.
- Beneficiaries – the birth of a child, a divorce, or the death of an existing beneficiary are all common reasons why you may wish to change the beneficiaries of a living trust.
- Terms – the terms of your trust determine how the assets are managed and invested as well as how and when they are distributed. You may decide, for any of a number of reasons, to change one of those terms.
Can You Make Changes to Your Living Trust?
Before discussing how you change your living trust, you need to be certain that you can make changes. If the trust is a revocable living trust, as the name implies, the Settlor may modify or terminate the trust at any time and for any reason. As such, if your trust is an irrevocable living trust you will likely need to consult with an attorney about your options for making changes. If, on the other hand, you created a revocable living trust then you do have the ability, as the Settlor, to modify the trust at any time.
How Can You Make Changes?
If you have determined that you are able to make changes to your living trust, there are three ways to make those changes, including:
- Trust amendment – a true amendment is best when the change you wish to make is minor. To amend a trust you will need to locate the provision or term in the original trust agreement that you wish to change. On a separate piece of paper, you explain, in detail, the change you wish to make to the original agreement. The paper with the amendment is then attached to the original trust agreement. State law may require you to sign the amendment in front of a notary and/or include the Trustee’s signature on the amendment.
- Trust restatement – a trust restatement is best if you have more extensive changes to make and/or the trust has been amended several times in the past. A trust restatement involves rewriting the original trust agreement with the changes included. You must be clear that you are not revoking the original trust, simply restating it. Like an amendment, you may need to execute the restatement in front of a notary and the Trustee may also need to sign the restatement.
- Trust revocation – you always have the option to revoke the original trust agreement and draft a new one. The drawback to this – and the reason why a restatement is almost always preferable – is that when you revoke the trust, all assets held by the trust revert back to the original owner and must then be transferred back into the trust once again. Doing this can have a number of unwanted ramifications, including tax consequences.
Contact Living Trust Lawyers
For additional information, please download our FREE estate planning worksheet. If you have additional questions or concerns related to making changes to a living trust, contact the experienced living trust lawyers at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.