How to Prepare an Amendment to a Revocable Trust

A revocable trust differs from irrevocable trusts in that it can be either amended or revoked before the grantor dies. In some states, a revocable trust is presumed be created unless the trust deed expressly states the contrary. Other states require positive evidence of an intent to create a revocable trust. Revocable trusts are popular because although they are taxable, the trust assets do not go through probate when the grantor dies but instead are distributed directly to the trust beneficiaries. Here is how a grantor can assure that the revocable trust can be easily and unambiguously amended.

Difficulty: Moderate

Instructions

Things You'll Need:

• Trust deed
• Driver's license or personal ID

1. Draft a clause for the initial trust deed that expressly states that amendments are permitted at any time before the grantor dies. Some states do not require such a statement in order for a trust to become revocable, but it is always a good idea to make your intentions as unambiguous as possible in a legal document, because even an unsuccessful lawsuit is a nuisance to grantors, trustees and beneficiaries.

2. Draft a trust deed clause that sets out clear instructions on how the trust may be amended. The process should be simple and unambiguous. It should be sufficient to state that the grantor may amend the terms of the trust by signing a statement outlining the terms of the amendment in the presence of a notary public and delivering it to the trust in person or by post.

3. Appoint a trustee that is not acquainted with any of your beneficiaries (a bank, for example), who you are sure will obey your instructions. Although trustees of revocable trusts are required by law to dispense the trust assets according to the grantor's instructions, trustees who are family members sometimes refuse to do so in the midst of emotional family disputes, resulting in unnecessary complications and delays for trust beneficiaries.

4. Create a written notification of the terms of your amendment, sign it, have it notarized (you will need to present ID for this), and send it to the trustee by registered mail, return receipt requested. Keep the return receipt with the trust deed and put them both in a safe place.

5. Execute a codicil to your will in which you expressly name the revocable trust and specify exactly how you wish to amend it. Date your codicil and sign it in the presence of two witnesses. The witnesses should also sign your codicil. If your trust deed does not spell out how the trust can be amended, a codicil to your will will operate to modify the terms of the trust in most states without sending the trust assets into probate. On the other hand, even if you have already prepared a valid amendment to the trust in accordance with the terms of the trust deed, a codicil can act as double assurance that the trust assets will be distributed according to your wishes without going through probate.

Tips & Warnings

• If you seek tax benefits, you should consider making the trust irrevocable and gradually adding assets to it as you age. As long as the trust is irrevocable, it is not legally considered to be your property. In this case, however, you will not be able to amend the trust after the trust deed is delivered to the trustee.
• Make certain to mention your revocable trust in the codicil to your will that restates the amendment of the trust terms, because some states require reference to a revocable trust in a will in order to prevent the trust assets from going through probate before they are distributed to beneficiaries. Probate will probably delay distribution of the trust assets to your beneficiaries, essentially defeating the purpose of creating a revocable trust in the first place.

Resources

• Uniform Trust Code, Sec. 602: Revocation or Amendment of a Revocable Trust

Who Can Help Sponsored

• Protect Yourself with a Trust - LegalZoom