Why Might I Need To Amend My Trust? What If My Trust Is An Irrevocable Trust?
There are many reasons you may need to amend your trust or estate plan. For example, if there has been a change in family circumstances, then you may need to change the way you plan to distribute your trust. If an expected beneficiary of your trust is teetering on the brink of financial ruin or plans to file for bankruptcy, then it is entirely possible that his or her inheritance could be taken by the bankruptcy court, and you may want to amend your estate plan in light of this if you correctly amend your trust to create a separate shared trust for that beneficiary so that the money does not actually belong to him or her, then it is very likely that your trustee can prevent the inheritance from being taken by the bankruptcy court. To do this, a carefully-worded separate shared trust will need to be prepared.
Next, consider the chance that one of a few of your beneficiaries grows up to be financially independent and does not need your support. Under such circumstances, it would be very reasonable for you to consider changing the benefit he or she would receive, and increasing the benefit that another beneficiary would receive. On the other hand, instead of becoming financially independent, one of your beneficiaries could develop a dependency on prescription medication or illegal drugs. In that event, a thoughtful parent or grandparent should consider amending their trust or their will to assure that their money is not taken by criminal courts or lost to criminal actors.
Lastly, it is important to understand that tax laws change and that some changes could make it important for you to reform your trust to account for the new tax law implications. You should talk with your tax preparer and estate planning attorney every year or two to assure that the plan you made is still legally appropriate and likely to reach the result that you are hoping to achieve.
When Do Families Generally Discover That The Estate Or Trust Is “Broken”?
Unfortunately, most families do not discover that an estate plan is broken or inappropriate until the trustor has passed away, at which point amending the trust will not be easy, if possible, at all. Sometimes trustees learn that the trust primarily benefits an incapacitated person whose government benefits will be terminated the instant they receive their inheritance. Unfortunately, these belated discoveries can require thousands of dollars in legal fees in order to assure that the entire inheritance is not lost forever. The same improved result can be achieved in advance for a small fraction of the cost to clean up the mess after the fact. Therefore, it is urgent that you review your estate plan with a well-qualified estate planning attorney as well as with your tax advisor every year or two and whenever you recognize that the law or facts have changed.
Can Irrevocable Trusts Be Changed?
There are certain kinds of irrevocable trusts that cannot be easily changed, but most of the irrevocable trusts that are created by my office can be amended to account for changes in the tax law, family dynamics, health of your beneficiaries, and for other reasons that you can’t readily predict at the time of creating your irrevocable trust.
Unfortunately, there are some irrevocable trusts that are very difficult to amend. For those trusts, we often have to seek intervention by the court in order to make the necessary changes. This can be an expensive proposition, but it often saves a tremendous amount of money in the long run.
Perhaps the most important takeaway on this topic is to use a well-qualified estate planner to assure that you create the correct kind of irrevocable trust. An irrevocable trust can be a beautiful thing if handled correctly and applied to the correct circumstances. It can also be a terrible liability if you do not choose the correct trust for the job.
For more information on Amending an Irrevocable Trust In OK, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (405) 754-4166 today.
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