Can I Change My Irrevocable Trust?
By definition, an irrevocable trust cannot be amended, modified or revoked. Common and state laws do realize that irrevocable trusts may become impractical or require amending due to changing times and economic circumstances. Trust changes can occur but in most cases, a court order is required to change a trust.
Other People Are Reading
-
Grantor Irrevocable Trust
-
If a living grantor has an irrevocable trust, it is important to determine why the creation of the trust was irrevocable to begin with. If the trust was set up for asset protection, tax or charitable purposes, it is possible that amending the trust may eliminate the protections that are in place. The grantor would be wise to consult legal counsel in this regard and determine whether a change or modification needs to occur. If so, the lawyer can draft a petition to the court to make the change. Even though the trust grantor is alive, the trust is still irrevocable, which means all interested parties to the trust would receive notice of the petition.
Irrevocable Trust Beneficiary
-
If the grantor of the irrevocable trust is deceased and a trust beneficiary seeks to amend the trust, a court order is required. If the change sought is practical and all of the interested parties agree that a change should occur, a trust lawyer will draft a petition and obtain consent from all of the parties. Unless there is a compelling reason not to approve the change, most judges will approve a trust modification if all interested parties agree. If all of the interested parties do not agree, a beneficiary can still file a lawsuit in the court to change or amend the trust. The issue would then proceed as a regular lawsuit, with the judge ultimately deciding what should occur.
-
Termination of Trust
-
If the change that a trust beneficiary is seeking is for termination of an irrevocable trust, a review of state statutes that govern the trust is prudent. If the trust is small, many states have statutes that allow the termination of a small trust as a matter of practicality. If the trust does not meet the definition of "small" under state statutes, a court order is required. The trust beneficiary hires a lawyer to petition the court, but unless there is an overwhelming reason to terminate the trust, most judges will not arbitrarily terminate a trust that does not fall under a small trust statute.
Non-Judicial Modification
-
The one caveat to obtaining a court order for changes to a trust is if the state having jurisdiction over the trust has enacted non-judicial modification as part of the state trust code (see Resources). This allows certain changes to trusts without court order if all parties agree. A lawyer determines if non-judicial modification applies and drafts the agreement. Once executed, the agreement becomes a permanent part of the trust agreement. In all trust law matters, it is always a good idea to seek legal advice in the state governing the trust because trust law varies by state.
-
