Amending an Irrevocable Trust

Amending an irrevocable trust requires court approval

An irrevocable trust is an estate planning tool that allows you to make a permanent transfer of ownership to a third party called a trustee. The purpose of an irrevocable trust is twofold: to reduce estate tax liability at your death, and to provide for beneficiaries after your death. You must give up control of the assets in the trust entirely for an irrevocable trust to be effective. After inception, the irrevocable trust cannot be changed unless certain steps are followed.

Things You'll Need

• Irrevocable Trust Agreement

Instructions

1. Obtain consent to modify the trust from all beneficiaries and the trustee. If all parties give their consent, an explanation in court is not necessary for modifying the trust. If necessary, a guardian ad litem is appointed by the court to protect the interests of any beneficiaries that are minors or incompetent. This guardian role is typically filled by a lawyer, social worker or volunteer.

2. Petition the court. This requires contacting the probate court and filling out the necessary paperwork. The paperwork varies from state to state; however after contacting the court, you should know exactly what is needed. A a copy of the trust document and the will of the transferor are needed. The court will then consider the original purpose of the trust and whether the requested modification is in line with that purpose. It will also consider the consent given by the beneficiaries.

3. Add the approved amendment and the court decision to the trust document. A lawyer will need to do this and all relevant parties will need to sign it. These new documents have to be present for the new modifications to be effective and for any decisions in the future.

Tips & Warnings

• If some of beneficiaries don't consent to the desired modification, an irrevocable trust can still be amended. However, in court it has to be proven that the non-consenting beneficiaries will not be affected negatively by the amendment. Irrevocable trusts can also be terminated if the value becomes too small to administer. Usually this amount is less than $20,000.

References

• Cooley Godward Kronish LLP: Amending Irrevocable Trusts