An irrevocable trust amendment allows a trustor to change their trust. If you consider amending an irrevocable trust, there are things you must know.
Author: Paul Black
Paul’s experience as the son of two parents with big health challenges is what led him to the work he does today and gives him first-hand knowledge of the challenges that many caregivers and family members face. After graduation from GSU Law, Paul was chosen from dozens of applicants nationwide as one of three 2010-2011 Borchard Foundation Law & Aging Fellows. Paul has been named as a SuperLawyers “Rising Star” in the area of Estate Planning and as a member of Georgia’s “Legal Elite” by Georgia Trend magazine. Published on: September 20, 2021.
What Is an Amendment of Irrevocable Trust?
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It’s never too early to start planning for your family’s future.
If you have questions, I’m here to help. There is no commitment, and we provide free initial 15-minute phone calls. We look forward to meeting you.
An amendment of irrevocable trust is the modification of the end-of-life agreement that you had drawn up by a reputable law firm to be enacted at your time of death. Generally, there are two types of trusts: revocable and irrevocable.
A revocable trust is designed to be easily terminated or amended by the trustor at any time. Irrevocable trusts are considered “set in stone” once it has been created without the option of being amended or revoked.
In reality, however, there are several ways to amend or revoke an irrevocable trust legally. Usually, the person who filed the life insurance policy and irrevocable trust may be the only one, with the assistance of a reputable law office, who has the authority to modify it.
Why an Irrevocable Trust Amendment is Important
There are several reasons why you might need to make an irrevocable trust amendment. Here are some reasons why an amendment to your estate plan may benefit you.
If You’re Remarried
When children, stepchildren or grandchildren are left out of the estate plan that you originally created, estate taxes often come into play when there is a death.
The estate taxes can be significant and make it impossible for those left behind to inherit what they should under the estate plan as originally written.
This is especially true if you’re married and want your spouse to inherit everything, but still want your children from a previous marriage or relationship to receive property or funds in accordance with the estate plan.
Using an amendment, you can alter your estate plan to include new spouses and children.
If Taxes Have Changed
Estate taxes are different now than they were in the past, but it’s possible that one or more of your beneficiaries is still subject to taxes because of how your estate planning documents are written.
By making changes to your estate plan through an amendment, you can make sure that your beneficiaries are not subject to these taxes.
If a Beneficiary Has Died
When a beneficiary dies before you, this can make it impossible to carry out your estate plans. If the amendment isn’t used in this situation, then the people left behind will receive what remains of your estate based on how it’s written in your original documents.
An amendment would allow you to leave different instructions for this type of situation.
The Basics of an Irrevocable Life Insurance Trust
When you initially create trust with your estate planning attorney, you assume you know your ultimate wishes. Depending on at what age you make this plan, your life may go through many changes along the way.
Modifying your trust can ensure that it fulfills your evolving intent. Still, it might prove to be a time-consuming and expensive endeavor if all the beneficiaries do not agree with the changes.
Since this process can result in unexpected consequences, it is vital to consult with an experienced attorney familiar with local and relevant tax laws.
When you’re interested in creating an irrevocable life insurance trust, you should consider hiring an estate planning attorney, as there will likely be numerous appointments and meetings with your lawyer to iron out the terms of the trust thoroughly.
It’s never too early to start planning for your family’s future. If you have questions, The Law Office of Paul Black is here to help. Contact the top estate planning attorney now for a free initial 15-minute phone call.
Can an Irrevocable Trust Be Amended?
If you’re wondering if an irrevocable trust can be amended, the answer is, “It depends.” You can find the information and advocacy you need by hiring a skilled law firm.
Even though most people plan the distribution of their estate carefully, they cannot predict future events. Therefore, modifying a trust can make it more streamlined and efficient and ensure that it follows the trustor’s full intent.
Unfortunately, it can be expensive and tedious, especially if some beneficiaries disagree. It is essential that you seek the advice of an estate planning attorney familiar with the local laws, as amending a trust agreement may result in unanticipated and unexpected income tax consequences.
If you want to create or amend modified irrevocable trusts, hiring Super Lawyer Paul Black can help you understand the purpose of the trust, as well as ensure your last wishes are fulfilled.
The Process for Amending an Irrevocable Trust
When you are amending an irrevocable trust, many aspects could be adjusted. The amendments could modify the trust to change any of the following:
- Distribution of trust assets
- Family changes through birth, death, or marriage
- Gift of a charitable nature
- Government benefits that have changed
- Identification of who will pay the estate tax of income tax
- Primary beneficiary
- Property division
- Provisions for new beneficiaries
- Special needs
With the assistance of an attorney, the grantor of the irrevocable trust determines who the trust beneficiaries are and what each is entitled to.
How to Amend an Irrevocable Trust: Step-by-Step
Although the amendment of an irrevocable trust can be a simple process, it may require extensive and expensive legal work. The steps below will help you understand the process of amending an irrevocable trust.
- Consult with your estate planning attorney to discuss your desire to amend the trust. This should be done before taking any steps to change the trust
- Your estate planning attorney may suggest a simple trust amendment that does not require court approval
- Filing an application with the court to approve an amendment to a trust can be costly and time-consuming. It is often not necessary if the proposed amendment is straightforward
- Notify all beneficiaries of the proposed amendment and allow them time to raise any objections.
- If all beneficiaries consent to the amendment, it may be possible to execute it without court approval
- If a beneficiary does not consent to the amendment, the court may need to review it
- All beneficiaries should cooperate with the application process to avoid delays or unexpected problems
- The court will decide based on the best interests of all involved parties
- The beneficiaries must comply with the terms of the amended trust after the court approves it
Decanting a Trust as an Alternative to an Irrevocable Trust
One of the ways your lawyer may suggest as an alternative to amending an irrevocable trust is through decanting. This is a possible solution if the trust enables the trustee to distribute any assets and income listed in the trust however they see fit.
Although there are specific rules the trustee must follow with this option, an experienced attorney will walk them through the process of decanting the trust. Basically, the trustee distributes the assets in the trust to a new trust that has better terms than more favorably benefit all of the beneficiaries.
Hire a Georgia estate planning attorney for additional protection when creating, enacting, or amending your irrevocable trust.
What Changed Circumstances Justify an Amendment to an Irrevocable Trust?
Although laws exist that specify the certain circumstances under which an irrevocable trust may be terminated or amended, you will need to seek court approval and request the judge approve the modifications.
The most common circumstances include, but are not limited to the following:
- Beneficiary agreement
- Changes in federal law
- For specific tax benefits
- If the trustor made mistakes
- Significant changes in circumstances
- The expensive of trust administration has become unreasonably
- There is a trust protector granted to make particular changes
- When the trust has been terminated because all property was sold
There are additional requirements for each of the circumstances mentioned above. Generally, regardless of the change, the resulting document must remain consistent with the original wishes outlined in the trust.
What Are Irrevocable Trust Amendment Mechanisms?
Trustees can use a few different methods to amend an irrevocable trust. The most common amendment mechanisms trustees use are described below:
Amendment By Consent
This happens when all of the beneficiaries agree to the proposed amendment. The trustee can then execute the amendment without seeking court approval.
Amendment By Court Order
This happens when one or more beneficiaries do not consent to the amendment. The trustee can then file a court petition and ask the judge to approve the modification. There must be evidence that the proposed amendment benefits everyone involved and complies with the grantor’s wishes.
Amendment By Trust Protector
This happens when the trust protector has the authority to make changes or amendments to the trust. The trustee submits the proposed amendment to the court for approval. If there is no trust protector, the trustee files the amendment with the court and seeks its approval.
What’s the Right Thing for You?
With the right estate planning attorney, you can be assisted in navigating the various irrevocable trust mechanisms.
You can contact our law firm by email ([email protected]) or phone call (404-410-6820) to schedule an appointment to discuss the future distribution of an asset and the trust’s viability.
Your attorney at our office in Decatur or Dunwoody, Georgia, will work hard to ensure the grantor’s wishes are satisfied and help the beneficiary navigate the potentially complicated matters during an emotionally challenging time.