A family trust can allow you to preserve your wealth, minimize estate taxes, and ensure your family’s financial well-being for years to come. However, like any estate planning tool, family trusts periodically need to be updated.
Do you have to start over to update your family trust? Fortunately, the answer is no.
Modifying a Revocable vs. Irrevocable Trust
Some family trusts are irrevocable trusts, which many people believe are impossible to amend or revoke. As such, you might naturally worry that you can’t change an irrevocable family trust.
However, there’s an important distinction to be made here: An irrevocable trust cannot be amended, revoked, or otherwise changed by the grantor, or the person who created the trust. But is is possible to create an Irrevcoable trust, giving someone else the ability to amend or revoke the trust.
As long as your irrevocable trusts authorizes someone else to amend it changes may often be made. However, you should seek the guidance of a qualified estate planning attorney to determine if your trust is eligible to be amended. You should always seek the advice of a qualified estate planning attorney when trying to amend a trust and to make sure that amendment is properly prepared.
Modifying a revocable trust is usually quite easy. Most family trusts are living trusts and are revocable, meaning they may be amended or revoked while the grantor is still alive and has capacity.
Options for Modernizing Your Family Trust
When you want to modify an outdated family trust, starting from scratch is often impractical. Depending on the trust and who created it, it may not even be possible. If you want to make important changes, you have two main options:
- Amendment: Replacing certain sections of the trust
- Restatement: Replacing the entire trust instrument
Before deciding which course is best, you should understand what each one entails.
Amending a Trust
Amending a trust involves creating a document that specifies which part of the trust is being changed and how. An amendment document will need to include the following details:
- The section being removed or revised
- The specific changes being made
- The date of the change
- An acknowledgment that the rest of the trust will remain valid
Amendments are typically used to make minor changes. If at all possible, it’s best to work with an experienced estate planning attorney when making amendments. This way you can be sure that all of the formalities required in creating an amendment are followed.
Restating a Trust
Replacing the entire trust instrument might sound like starting from scratch. However, legally speaking, it isn’t — the trust’s name will remain unchanged, and you won’t have to retitle assets.
Restating a trust is really amending the trust. However, instead of specifying a particular change to be made, a restatement document essentially says that you’re taking your previous trust document and replacing it with a new one.
Unless you only need to make minor changes, restating a trust may be the best way to update it.
Modernize Your Family Trust or Trust Fund
Periodic changes are critical to ensure that your trust continues to meet your family’s needs. If you’re looking to modernize an outdated family trust, call Boyd and Boyd at (508) 444-9688 or contact us online to request a consultation.
FAQ
Can I Change a Family Trust Without Starting Over?
Yes. An attorney can help you amend or restate your trust as desired.
Can I Change an Irrevocable Family Trust?
It depends. Generally, an Irrevocable Medicaid Planning Trust may NOT be amended. However, many other types of Irrevocable trusts are built so that they may be amended. Depending on the terms of the trust and state law, there mayu be as many as four methods to amend: (1) amendment by court action; (2) amendment by agreement of the Donor, Trustee and Beneficiaries; (3) amendment by a Trust Protector; and (4) decanting. Which, if any, of these approaches may be used depends on how the Irrevocabler trust is written and the governing law of the trust.
