Trusts were once used primarily by wealthy families who wished to pass down the family wealth from one generation to another while still retaining some degree of control over the assets. Today, however, trusts are a common addition to any comprehensive estate plan. If you have included a trust (or several) in your estate plan and now wish to change or amend your trust you may be concerned that making changes to your trust is a complicated undertaking. In most cases, this is not so.
First, it is important to understand what type of trust you have created. A trust can be irrevocable or revocable. An irrevocable trust cannot be changed, amended, or terminated once created. This means you cannot alter the terms of the trust at all –not even to add or delete a beneficiary. Therefore, if you created an irrevocable trust it cannot be changed. If, however, you created a revocable trust there are several ways in which the trust can be changed.
The purpose of the change, as well as the complexity of the change, will be a significant factor in determining how to effectuate the change. If you simply want to add funds to the trust you probably do not have to make any changes. A well drafted trust usually includes language which allows you to add funds after the trust becomes effective. Other changes though do require you to do something to legally reflect the change.
The easiest route is to amend the trust. This is typically accomplished by reducing the intended change to writing and adding the “amendment” to the original trust. The addition is labeled “Amendment to Trust”, explains the intended change, and is signed, dated, and notarized. This works well if you want to add or delete a beneficiary for example.
When making more significant changes to a trust a restatement often works better. This requires you to rewrite the original trust and include all the new changes in the new document. Although it may appear as though you are simply creating a new trust, legally you are not. Revoking the existing trust and creating a new one can create problems because all of the trust property must be transferred out of the first trust and into the new one, a process that often results in a mistake. By legally restating the trust you can make even major changes to the trust without the need to shift the trust assets around and risk an error.
Of you need to make a change to an existing trust be sure to consult with your estate planning attorney before doing anything.
Stephen A. Mendel, Estate Planning Attorney
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