When Should Family Trusts Be Updated?
A family trust provides protection from creditors and allows a grantor--an individual who establishes a trust fund--to control how his children and relatives benefit from his estate. As time passes, you may need to make minor to major changes to your original trust document.
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Identification
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A grantor must update a family trust document to transfer a new asset into a trust or to correct incomplete or inaccurate information such as the birth date of a beneficiary. An asset is an item that has immediate value, such as real estate, heirlooms and stocks. If a grantor fails to update her trust, the successor trustee will manage and distribute the trust's assets according to the instructions outlined in the original trust document.
Minor Changes
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Amend a family trust to correct minor changes to the original trust document. Changing an incorrect birthday on a trust document is an example of a minor change. Because an amendment relates to the change of a small item, it is not necessary to write a new trust document. Simply fill out an amendment form. Sign and date the form in front of two witnesses. Have the form notarized and then attach it to the original trust document.
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Major Changes
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If you wish to make a major change such as transferring a new asset into your family trust, you must update your original trust document to reflect that change. A restatement is a restructured trust document that is used to record significant changes to an original trust document. All preceding trust documents become null and void when a restatement document is signed by all trustees, two witnesses, and a notary.
Supplemental Instruction
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The only way to offer supplemental instruction--regarding how to distribute assets, for example--is to complete a supplemental instruction document. A supplemental instruction document does not attach to an original trust document. It must, however, be included with your trust portfolio papers. As with any document related to a trust, it must be signed, dated and notarized.
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References
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