As long as your trust is revocable, it can be modified. Whenever your financial status changes, it is important to review the terms of your trust and make any necessary modifications. The flexibility of a revocable trust is what makes it such a valuable estate planning tool. If you buy or sell assets, it is wise to review and modify your trust.
How to fund your trust with your assets
Assets such as stocks, bonds, real estate and other real property can often be funded into a trust simply by changing the owner’s name to the name of your trust. There may be additional requirements depending on the policies or procedures of some financial institutions. However, making modifications to your trust to add new assets, or remove others, requires a few more steps.
Amendments and Restatements
There are basically two ways to modify your revocable trust. One way is by amendment and the other is with a restatement. An amendment can be drafted to include whatever changes are needed, and then added to your original trust. A restatement is another way to change the terms of your trust. With a restatement, you make it clear that all of the original terms of the trust remain the same, with the exception of the specific new terms.
Revoking your trust and starting again
The final option, is to simply revoke the original trust and create an entirely new one. In some cases, this may be the best option. For instance, if you expect that your revisions are going to be substantial, amending the trust may be too complicated or confusing. Similarly, if you end up with several amendments, that can also be confusing.
Revoking the trust and creating a new one allows you to be sure that the terms remain accurate and clear. The only downside to revoking the trust is that all of the property will have to be transferred to the trust again. This method can be more expensive and a little time consuming.
What happens if I have a shared trust?
When spouses, for example, have a shared trust either one can revoke the trust. If changes are made to the terms of the trust, such as an amendment or restatement, then both spouses must agree to all of the modifications in writing. After the death of one spouse, the surviving spouse can amend the terms of the trust that relate specifically to his or her own personal property. No changes can be made to terms that refer to the deceased spouse’s trust property.
If you have questions regarding trust modifications, or any other estate planning needs, please contact the Schomer Law Group either online or by calling us at (310) 337-7696.