A “revocable trust” is a trust where the person establishing the trust reserves the right to cancel the trust and recover the trust property and any undistributed income. The person creating the trust is called the “settlor.” Revocable trusts are contrasted with irrevocable trusts, which generally cannot be changed, modified, or canceled without the consent of the.
In general, trusts are financial estate planning tools that allow a person to transfer property to another person under certain terms and conditions. There are many different types of trusts that can be created.
How are Revocable Trusts Created?
All trusts are irrevocable to begin with, unless otherwise specified in the trust agreement. If the person establishing the trust (the settlor) would like to reserve the power of revocation, then a provision for the revocation is inserted into the trust agreement. Most revocable trusts are called living or inter vivos trusts, meaning they are created within the settlor’s lifetime.
If you want to learn more about how to revoke, or terminate, a trust, then read about: Trust Termination Lawyers.
How Do You Revoke a Revocable Trust?
Most states require the power to revoke the trust to be stated in the trust agreement. For this reason, most trust agreements will contain details concerning the way a trust may be revoked. In order for a trust to be revocable, the revocation has to comply with the manner stated in the trust agreement.
If, however, there are no details or manner specified regarding revocation, then the person establishing the trust may revoke the agreement in any way that clearly shows his/her intent to revoke the trust.
For example, creating a valid document that clearly states that the trust has been revoked/terminated. You could also make steps to remove the assets of the trust, and making sure that the trust is empty. The method will vary depending on each situation, so be sure to contact an attorney to find out what method is right for you.
Can a Trust be Revoked at Anytime?
Besides a couple of exceptions, a person creating a revocable trust can revoke the trust at anytime. This can happen so long as the revocation is within the terms of the trust agreement. A revocable trust generally cannot be revoked when the person creating the trust is not competent to form a trust.
A revocable trust also cannot be revoked by a conservator, or guardian, appointed to an incompetent settlor. Furthermore, a revocable trust usually cannot be revoked by a successor or an agent, unless the agent was specifically granted the power of revocation.
Do You Modify a Revocable Trust?
The same principles that apply to revocation of a trust apply to modification. In order for a revocable trust to be modified, the power to modify must be stated in the trust agreement. The statement or provisions must be clear and specific. Modification of the trust will be permitted if the modification complies with the terms in the trust agreement.
These types of details about a trust can be complex. Further, state laws may vary regarding revocation and modifications of trust instruments. It may be necessary to consult with a trusts lawyer for advice regarding the specific rules regarding trusts in your area.
What Types of Legal Issues Can Arise with Revocable Trusts?
Revocable trusts may be associated with a wide range and a variety of different legal issues, conflicts, and disputes. These can involve several types of laws and subject matter, including:
- Timing of the Revocation: There may often be disputes regarding the timing of a revocation, or when it actually happens. A revocation of a will generally means that the beneficiaries will no longer receive the specified property or financial assets.
- A beneficiary may have been depending on the trust property for various reasons. If the revocation occurs at a certain time, it can cause legal conflicts in many cases.
- Conflicts Regarding the Trust Property: Some legal conflicts and lawsuits are based on issues with the trust property. For instance, there may be confusion regarding the property if it is hard to identify or locate based on the trust instructions.
- That is, many disputes often result from poorly-written or poorly-created trust documents and instruments. These types of disputes can be avoided by specifying exactly what property or financial assets are involved. For instance, it may be necessary to specify which bank account trust money is coming from.
- Validity of the Revocation: There may also be disputes as to whether a revocation of a trust was actually valid. For instance, if the trust did not meet the state requirements for being a revocable trust, it can cause disputes if the settlor then tries to modify or cancel the trust.
- For this reason, it is important that you double-check to ensure that your trust meets all the legal requirements if you intend for it to be classified as revocable.
Do I Need a Trust Attorney for Help with a Revocable Trust?
Trusts are usually very complicated financial instruments. Depending on the type of trust, they can be very complex. Therefore, seeking out a trust lawyer, is highly advisable given the nature of trust agreements. This is particularly true if the person establishing the trust would like to reserve the power of revocation.