Estate planning is a course of action for every family. A good estate plan can provide security for the future in a comprehensible, customizable way. A revocable trust is an example of one of many valuable tools that can be included in a comprehensive estate plan. What happens, though, when family situations change, financial status fluctuates and other aspects of your life change? You may be wondering: Can I modify my trust? Of course you can!
Methods of modifying a trust
There are basically three different ways to change your revocable trust: by amendment, by restatement, or by revoking the trust and creating a new one. Though the last method is technically not a modification, it is still a method of changing the terms. Regardless of which methods you determine accomplishes your goals best, you must be aware of the laws in your state so that your changes will be valid.
Amend or revoke?
There can be certain situations where an amendment will be sufficient. However, depending on your circumstances, revocation may be best. For instance, if you get married or have a baby, an amendment to include provisions for the new additions to your family may suffice. The same is true if a beneficiary or spouse passes away. Adding property to your trust, or changing beneficiaries can also easily be accomplished with an amendment.
On the other hand, if the revisions you need are extensive or complicated, revocation may be a better idea. Revoking the trust and starting over will make it easier to include clear and accurate terms, with no confusion. One drawback, though, to revoking a trust is that you will be required to transfer certain property to the new trust. Transferring property again can be expensive and troublesome, depending on the complexity of your assets.
The benefits of creating a restatement of your trust
If you add too many amendments to your trust, it can become messy and confusing. There is another option. You can restate the existing trust, without revoking it completely. In doing this, you only need to include the changes you want to make, while keeping the original date of the trust. This way, the property you have already transferred to the trust will not be disturbed, which is less expensive. Restating a trust is a simple process. A trust is created with the new terms, which states that it is a restatement of the original trust. The restatement must indicate that all of the original terms of the trust remain, except for the new terms you have added.
What if I have a shared trust with my spouse?
Modifying a shared trust is a little different. If you have created a shared trust with your spouse, for instance, either one of you can revoke the trust at any time. However, if you simply need to change any of the terms of the trust, both you and your spouse must agree to those changes in writing. Even if one spouse passes away, the surviving spouse can only amend the terms of the trust that relate to his or her own property. None of the terms that relate to the deceased spouse’s trust property can be modified.
If you have questions regarding modification of trusts, or any other estate planning needs, please contact the Schomer Law Group either online or by calling us at (310) 337-7696.