An irrevocable trust, as opposed to a revocable trust, cannot be changed, amended or broken once the grantor, or person creating the trust, sets it up, except under "totally unforeseen circumstances." Under Indiana law, the beneficiaries to an irrevocable trust cannot change, but property may be added to the trust under certain conditions. It is important that any grantor understand that decisions made regarding an irrevocable trust are final.
An irrevocable trust is a common estate-planning tool. Property included in these trusts does not go through the probate process, but passes directly to designated beneficiaries. Some Indiana trusts may be created for specific purposes, such as paying for the decedent's funeral and burial expenses. This is an efficient way of paying for this timely and necessary expense without burdening estate assets. Indiana does not permit any type of funeral trust other than an irrevocable trust.
Setting Up an Irrevocable Trust
Under Indiana law, any non-testamentary trust, or trusts not created by a will, is considered valid if its creation is in accordance with the jurisdictional laws under which the trust was executed or the law when the trust was created in the jurisdiction where the grantor creating the trust had a primary residence. If the grantor, also known as a settlor, had a place of business in the jurisdiction where the trust was created or real estate included in the trust in that jurisdiction, Indiana law provides for recognition of the trust. For validity, the trust must be signed in writing by the grantor or the grantor's attorney, acting as agent.
In a revocable trust, the grantor has complete control of any property in the trust during his lifetime. At death, the revocable trust becomes irrevocable. If the grantor creates an irrevocable trust during his lifetime, under Indiana law, he may add or create property to tbe placed in the irrevocable trust. However, he cannot remove property already placed in the trust. If adding or creating property, the grantor must be at least 18 years old and of sound mind and understand the terms and nature of the irrevocable trust. That is, he must understand that once he adds property, it cannot be removed.
Indiana law provides for amendments to an irrevocable trust if new laws or judicial decisions "highly detrimental" to an irrevocable trust or its beneficiaries are created, or other completely unforeseen circumstances occur which seriously impair the trust's intents and purposes. It is possible that under such circumstances the trust could be broken or amended, if that change created a situation originally intended by the grantor. The trustee must petition the court in the trust's jurisdiction to determine whether the particular circumstances meet Indiana standards, and whether breaking or changing the trust would be in the best interests of the beneficiaries.