A revocable trust is a trust where the settlor, or person establishing the trust, reserves the right to cancel the trust and recover the trust property and any undistributed income.
How Is a Revocable Trust Created?
In general, all trusts are irrevocable, or unable to be taken back, unless otherwise specified in the trust agreement. If the person establishing the trust would like to reserve the power of revocation, then a provision providing for the revocation is inserted into the trust agreement. Most revocable trusts are called living or inter vivos trusts.
Under What Conditions Are Revocable Trusts Revocable?
Because most states require the power to revoke the trust to be reserved in the trust agreement, most trust agreements will contain details concerning the manner in which a trust may be revoked. In order to be revocable, the revocation has to comply with the manner specified in the trust agreement. If, however, there are no details or manner specified, then the person establishing the trust may revoke the agreement in any manner that demonstrates his/her intent to revoke.
Can a Settlor Who Has Reserved the Power of Revocation Revoke a Trust at Anytime?
Save for a couple of exceptions, a person creating a revocable trust can revoke the trust at anytime so long as the revocation is within the terms of the trust agreement. A revocable trust cannot be revoked when the person creating the trust is incompetent. Nor, may a revocable trust be revoked by a conservator, or guardian, appointed to an incompetent settlor. Furthermore, a revocable trust cannot be revoked by a successor or an agent, unless the agent was specifically granted the power of revocation.
How Can a Revocable Trust Be Modified?
The same principles that apply to revocation apply to modification. In order for a revocable trust to be modified, the power to modify must be reserved in the trust agreement and must be clear and specific. Modification will be permitted if the modification complies with the terms in the trust agreement.
Do I Need a Trust Attorney?
Trusts are usually very complicated documents and depending on the type of trust can be very complex. Therefore, seeking out an estate planning attorney, particularly if the person establishing the trust would like to reserve the power of revocation, is highly advisable given the nature of the agreement.