Trusts are a favored estate planning tool in large part because they are so flexible. They can be used to adapt to a wide variety of estate planning needs.
We particularly like using Trusts (“Living Trust” or “Revocable Living Trust” referred to here as a “Trust”), in conjunction with a Last Will and Testament (“Will”) to achieve a comprehensive estate plan for clients.
But clients often wonder whether, once the Trust is set up, it is set in stone. In other words, they often ask whether the terms of a Trust can be changed.
Today’s post looks at that question.
What is a Trust?
First, however, it is important to understand what a Trust is and what it does.
A Trust is a written agreement between 3 people:
- The “grantor” (aka “settlor” or “donor”) —who is the person who makes the trust (i.e. you)
- Those who benefit from the trust (“beneficiaries”) (i.e., your family, charity, etc.), and
- The Trustee who administers the trust. (This is generally you during your lifetime, then someone you have named (“successor trustee”) who will take over at your death or if you become incompetent).
Trusts can be used to achieve certain estate planning goals such as:
- Providing for a family member with Special Needs
- Protecting property from creditors
- Preventing a child from getting too much money all at once
- Avoiding probate
When you die, the Trust’s terms control how the assets placed in the Trust (i.e., money and property) are distributed. And, because the trustee of the Trust (or successor trustee) is the legal owner of all the property in the Trust, when you die, the trust property does not have to go through the probate court.
Can Trust Terms Be Changed?
In addition to the variety of trusts available, Trusts can be revocable or irrevocable.
Until 2007, irrevocable trusts were just that: irrevocable. Once fully executed, irrevocable trusts could not be changed. Since 2007, however, 25 states have passed laws allowing the terms of a Trust —with certain limitations— to be modified without going to court.
The ability to change a Trust’s terms is important because no matter how carefully one plans or tries to account for the future, the terms of most Trusts do not always account for changes in circumstances that can arise years after the Trust was created — including changes in tax laws and family situations.
Generally speaking, in Florida, the terms of a revocable trust can be changed by amending the Trust in accordance with the amendment instructions or procedures that are typically described in the Trust declaration. (There is, of course, a lot more to this, so it is advisable to talk to a Florida trusts and estates attorney.)
Irrevocable trusts, while more difficult to modify, can also be amended in Florida. Depending on the situation, you may need to petition the court to amend an irrevocable trust.
Another means of changing the terms of a Trust in Florida, is called “decanting.” While by no means a simple process, decanting is the creation of a new trust (also known as a “second trust”) into which the trustee of the trust moves all the assets from the old trust. (Like pouring wine into a decanter.) The result is that the old trust is terminated, and the new trust provisions govern the use of the trust property.
If you have questions about trusts or the terms of a trust, you should speak to experienced trusts and estates attorney.
Protecting Your Family is Just a Phone Call Away.
Don’t leave planning for your future and that of your loved ones to chance. All it takes is one phone call to SJF Law Group to ensure that your wishes will be followed, and your loved ones taken care of when you are gone. We expertly guide individuals through the complex probate process, and capably handle all aspects of the creation, administration, and settlement of trusts as well. When you work with the estate planning attorneys at SJF Law Group, you get more than just an estate plan: you get peace of mind. Call us at 954-580-3690 or email us at: [email protected] today.