Over the course of your lifetime, you will probably make numerous changes to your initial estate plan. If you included a living trust in your estate plan, for example, you may want to modify that trust at some point. Although you should always consult with your estate planning attorney when making changes to a trust, a Port St. Lucie trust attorney at Kulas Law Group explains the general process for modifying your living trust.
What Is a Living Trust?
A trust is a legal relationship wherein property is held by one party for the benefit of another. A trust is created by a Settlor who appoints a Trustee to administer the trust. The Trustee property transferred into the trust for the benefit of the trust beneficiaries. All trusts fit into one of two categories – testamentary or living (inter vivos) trusts. Living trusts can be further broken down into revocable and irrevocable living trusts.
Can You Modify Your Living Trust?
The first hurdle you must get past whenever you want to modify a trust is whether you can make the desired modifications. An irrevocable living trust cannot be modified by the Settlor whereas a revocable living trust can be modified or terminated by the Settlor at any time and for any reason.
How to Modify Your Living Trust
Assuming you can modify your trust, the next step is deciding how you wish to go about making the desired modifications. Changes can be made to a living trust in three ways:
- Amending the trust – a trust amendment is best when the change you wish to make is minor and the trust has not previously been amended. 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 labeled “Trust Amendment” 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 additional steps, such as including the Trustee’s signature on the amendment and/or signing the amendment in front of a notary.
- Creating a 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. As is the case with an amendment, state law may impose additional requirements relating to the execution of the restatement.
- Revoking the trust and starting over – revoking a trust sounds much the same as restating a trust; however, there are important differences. Although the procedure is virtually identical, the language makes a huge difference. A restatement is almost always preferable to revoking a trust because when you revoke the trust, all assets held by the trust revert to the original owner and must then be transferred back into the trust once again. Even though the trust assets are only technically out of the original trust for as long as it takes to sign the new trust agreement, the fact that they were legally removed at all can have unintended tax consequences that can almost always be avoided by using a restatement instead of revocation.
Contact a Port St. Lucie Trust Attorney
To learn more, please download our FREE solid estate plan checklist. If you have additional questions or concerns about modifying a living trust, please contact an experienced Port St. Lucie trust attorney at Kulas Law Group by calling (772) 398-0720 to discuss your legal options.