Creating a trust fund is a decision for individuals who want to safeguard their assets and plan for the future. Trusts provide flexibility, privacy, and control over wealth after one’s passing. However, life is unpredictable, and circumstances can change. That’s why it’s crucial to grasp the provisions for revoking or amending trusts when necessary. Before delving into the specifics of revoking or amending a legal trust, know what a trust entails. A trust is an arrangement where one party (the grantor) transfers assets to another party (the trustee) for the benefit of a party (the beneficiary). The trustee manages these assets based on the terms outlined in the trust document. In this blog, we will explore everything you need to know about revoking and amending trusts.
Revocable Trusts vs. Irrevocable Trusts
Can they revoke my trust? It is a natural question for people to ask. There are two types of legal trusts: trusts and irrevocable trusts. As their names imply, revocable trusts can be canceled by the grantor at any point during their lifetime without needing permission from beneficiaries or any other parties involved in the trust. On the other hand, trusts that are irrevocable typically can only be changed or canceled with the consent of all parties and beneficiaries.
Revoking a Trust
There could be reasons why someone may consider revoking a trust they have established;
- Change of Circumstances: Life is full of twists and turns. It’s possible that events like divorce, significant financial changes, remarriage, or shifting situations could impact an individual’s priorities when it comes to estate planning.
- Loss of Trust: In cases after creating a trust, individuals may lose faith in their chosen trustees or beneficiaries due to evolving personal relationships or other concerns.
Advantages of Revocable Trusts
Revocable trusts offer individuals flexibility and control. Some key benefits of trusts include;
- Flexibility: With trust, you have the ability to modify or revoke specific provisions as needed, ensuring that your financial goals align with any changes in your life.
- Privacy: Unlike wills that become part of records during probate proceedings, revocable trusts allow for the distribution of assets while enabling confidential wealth management.
Amending a Trust
Revoking a legal trust may not always be necessary or preferred. Instead, individuals might want to make amendments to provisions within their existing trust. There are reasons why someone might need to make changes to a trust.
- Changing Trustees: Over time, the original choice of trustees may no longer be suitable. It could be due to factors like illness, death, conflicts of interest, or disagreements among beneficiaries regarding trustee decisions. In some cases, it may be necessary to amend the trust in order to replace trustees.
- Modifying Beneficiaries: Circumstances that affect the eligibility of intended beneficiaries for distributions from the trust can change. When this happens, amendments can be made to adjust the list of beneficiaries
When is it Better to Amend than Revoke?
Amending a trust is preferable when minor changes are needed, and there is no need for an entirely new document or loss of valuable benefits associated with previous versions of the trust instrument. It’s important to seek expert advice before deciding whether revocation or amendment is the course of action based on your specific circumstances.
Final Thoughts
Trusts provide benefits in estate planning and wealth preservation strategies; however, life’s constant changes mean that flexibility is crucial for adapting as circumstances evolve. Whether you choose to revoke or amend your trust depends on factors determined by preferences and updated conditions. Remember that regularly reviewing your estate plan— with guidance from an estate planning attorney—can help you assess if revoking or amending your trust is necessary. It is crucial to comprehend the process, consult with legal experts, and adjust accordingly as life circumstances evolve to ensure your trust serves as a base for security.
