A person may want to change or amend a trust for many reasons. For example, they may wish to add or remove the beneficiaries, alter the provisions of the trust, or change the trustee.
Some trusts can be modified or terminated, while others cannot be modified or terminated. It all depends on the terms of the trust and whether the trust is revocable or irrevocable.
A revocable trust can be changed or even terminated by the trustor who created it at any time. On the other hand, irrevocable trusts simply cannot be changed or terminated. There are exceptions that depend on the type of trust and its terms.
For example, in some cases, an irrevocable trust may be changed if all of the beneficiaries agree or if the change is in the best interest of all of the beneficiaries. The parties who want to amend the trust in these cases would probably have to go to court to achieve the amendment. There are other limited exceptions. But generally, amending an irrevocable trust is not done.
Which Trusts Are Revocable?
A living trust is a type of trust that is almost always revocable. People usually establish living trusts to avoid probate. Typically, the trustor of a living trust names themselves as the trustee of the trust. They also name a “successor trustee” to serve as the trustee once the trustor dies.
Trustors usually set up living trusts to maintain control of the trust property during their lifetimes and then avoid probate when they pass away. Generally, the trustor of a living trust usually has the power to change or terminate the trust during their lifetime. In fact, they choose a living trust because it is revocable.
How Can I Modify a Living Trust?
While the trustor is still alive, if they only want to make minor changes to their living trust, they would usually simply add an amendment or restate the trust rather than revoking it and writing a new one. Making a new trust would require the trustor to transfer all trust property to the new trust. In some cases, this might be a huge task.
Amending the trust involves adding a page to the trust document stating the changes. Amending a trust is enough to effect small, simple changes, such as changing the name of a trustee or beneficiary.
Restating the trust might be the better approach for more significant changes because a trustor would “restate” the entire trust, including the changes. Doing this leaves less room for confusion or ambiguity. However, if the trustor wants to make substantial changes, they should probably revoke the original trust and rewrite the trust document to make a new one.
Revocations, amendments, and restatements must be in writing, signed by the trustor, and notarized. Generally, a living trust cannot be changed or revoked after a trustor has passed away.
Can a Testamentary Trust Be Amended?
A testamentary trust is a trust that is created when the trustor passes away. Typically, a person sets up a testamentary trust in their will. This type of trust is usually used to set up trusts for minor children so that a responsible adult is named to help manage a child’s inheritance.
If a person has a provision for a testamentary trust in their will, they can modify it or revoke it at any time. After the person passes away, however, it is irrevocable, which means it could only be amended under very limited, exceptional circumstances. The trustee or beneficiaries may be able to modify the trust after the trustor’s death, but, again, only under limited circumstances.
It is important to note that a person should never make changes to this document by simply removing a page or by re-typing one to include new information and then replacing it. This sort of action can invite legal disputes from an unhappy non-beneficiary or may require a court to step in to interpret the trust terms.
Do I Have to Amend a Trust to Add Property to It?
If a person wants to add property to their trust, they do not need to amend the trust. A trust that has been set up correctly should already contain language that gives the trustor a right to include property that is acquired after the trust is created.
To add property, the trustor would only have to ensure that the documentation to transfer ownership of the property is completed correctly. It can then be added to the trust’s schedule of assets.
On the other hand, the person has to amend the trust if the acquired property is going to a different beneficiary than the one already named in the trust. A trust would also have to be amended if the trust has more than one beneficiary listed.
There are some cases where amending a trust might cause confusion, such as when a person wants to add a large amount of property or if they want to make other significant changes to the trust. Scenarios such as these can make amending a trust more difficult and costly. One possible solution would be to restate the trust document.
Restating a trust document allows the person to keep the original date of creation of the initial trust. It also avoids making any changes to the property that is already in the existing trust.
What if I Want to Make Major Changes to a Trust?
Suppose a person wants to make major changes to an existing trust. In that case, they can either revoke the current trust, or they can restate the terms of the trust document in their entirety, making the necessary changes in the new version.
In cases where a trust is revoked and replaced with a new one, the process of transferring property from one trust to another should be done carefully. If not, then there is a risk that not all of the property or assets will be transferred from the old trust to the new, revised one.
Restating a trust instead of revoking it may be the more efficient way to go because all the trust property remains in the original trust.
As discussed, there are many reasons why a person may want to amend their trust. The following list provides some of the most common reasons:
- The trustor gets married and now wishes to include their spouse.
- The trustor has children and wants to add their children, or a child born after the trust was created, as beneficiaries.
- A spouse who is a trustee or a beneficiary passes away.
- Another beneficiary passes away.
- The trustor wants to add property to the trust.
- The trustor may move to a state that has different laws on how marital property is distributed.
- The trustor wants to designate new beneficiaries.
Regardless of the reason, amendments must be done properly and in accordance with the applicable trust law of the state where the trust is located, which must allow the amendment of the type of trust involved.
Do I Need to Hire an Attorney for Help With Amending My Trust?
The process of setting up and drafting the documents to form a trust can sometimes be a challenge. The same can be said when it comes to amending a trust because any changes need to be recorded just as carefully. The manner of amending the trust must comply with the applicable laws.
If you want to amend a trust, you should consult a local trust lawyer for guidance. A lawyer with experience in these matters will be able to execute the appropriate trust documents and ensure that any amendments you wish to make are done correctly and have the effect you want.