Most comprehensive estate plans include a trust. If you have created one and added it to your estate plan, the need may come for changes. Whenever certain aspects of your life changes, such as finances or additions to your family, it becomes necessary to reconsider the terms of your trust and make necessary changes to its terms. The need to make changes may arise more than once during your lifetime. As long as the trust you created is revocable, it can be amended or revoked at any time. A common question among clients is, “how do I revoke my trust?”
Ways to modify your revocable trust
One of the most important benefits of a revocable trust is its flexibility. There are several ways to make changes to your trust, each with its own benefits. You can always revoke your trust entirely and draft an entirely new trust. Or, you can amend or restate the terms of your trust, in order to incorporate needed changes. Whichever way you go, understanding the laws in your state governing trusts is important. That is the only way to be sure your revisions are valid.
Deciding whether to amend or revoke your trust
Whether you decide to amend or revoke your trust, you should arrive at the same result. However, there are some situations where an amendment is simpler, but equally sufficient. For example, if you get married, have a baby, or acquire substantial property, an amendment may be the best choice.
On the other hand, if the revisions you need are complicated or substantial, revoking the trust and starting over from scratch, may be a better option. This method would provide you the opportunity to ensure the new terms are accurate and clear. But, revoking a trust is much more complicated than amending a trust. The property that has already been transferred to the trust must be transferred again with each revocation.
When a restatement might be a better choice
It is true that simply amending a trust can be an easy fix. Then again, if you have too many amendments, the terms of the trust are likely to become confusing. Restating the terms of your trust may be a better solution.
The terms of an existing trust can be restated, without revoking the trust. This method allows you to include the required changes, while keeping the original creation date of the trust. That means the property already held in trust will not need to be transferred yet again. You need only indicate that it is a restatement of the original trust, that the original terms should remain the same, with the exception of certain specified terms to be added.
How is a shared trust treated differently?
It is common for spouses to create a shared trust, which would allow either spouse to revoke the trust. The only catch is that both spouses must agree to all changes in writing. If one spouse dies, the surviving spouse is free to amend the terms of the trust only as they relate to his or her property.
If you have questions regarding trusts, or any other estate planning needs, please contact the Schomer Law Group either online or by calling us at (310) 337-7696.