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Amending a Living Trust
As the saying goes, “Don’t put your trust in money, but your money in trust.” A “living” or (“inter vivos”) trust is called so, because it is set up during the lifetime of the person, or “settlor,” giving away money or other assets. The settlor gives money to a “trustee” to hold for named “beneficiaries.”
The main purpose of setting up a living trust is to avoid probate fees after the settlor dies. During probate, players such as courts, lawyers, and executors ask for money as they follow the complicated probate code, and these costs will sap the estate. The idea of a living trust is that the money has already been legally distributed before death according to contract law, thus removing the need for probate.
There are two kinds of living trusts: revocable and irrevocable. An irrevocable trust, as the name suggests, is not amendable. It is money that the settlor has completely given away. This can save not only on probate fees, but on taxes too.
The typical living trust, however, is revocable, meaning that the assets still legally belong to the settlor. Furthermore, the settlor can change or modify the trust terms at any time.
The first way to modify a revocable living trust is with an attachment – simply rewrite the trust using the same form as the original, notarize the signatures, and file it with an attorney.
The second way to amend a revocable living trust is to draft a “restatement” of the trust. This is when the whole trust is re-drafted with a clean revision. This will need to be done once the trust has accumulated a number of confusing attachments.
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