From our “Ask a Question” Mailbag: Revocable Trust Amendment
Most Recently Updated August 9, 2018.
“How can I amend my revocable trust?”
Revocable Trust Amendment
Revocable Trusts formed during your lifetime are typically designed to be easily “revoked” or modified. Because a Revocable Trust is meant to replace your Will, it should take into consideration the fact that life brings change. Over time you may wish to alter your preferences.
I would need to see your Revocable Trust to point out the clause, but there should be a paragraph that states the trust is revocable in full and that you are free to make amendments.
See my website for more in-depth information about Revocable Living Trusts.
Amending A Revocable Trust Carefully.
Granted that it might be easy to change your trust, but do so carefully. Modifying the trust is like changing your Will. If you make a mistake or are unclear, you could unintentionally void a gift, create litigation or create a taxable event. Further, you must use the correct language to show that your Amendment does not completely void the remainder of the Trust. I have seen people try to amend a Revocable Trust by adding a gift, but they instead modified the trust so that only the single gift existed. As a result, all the rest of the assets then passed under the rules of intestacy. A terrible result!
Handle a Revocable Trust modification with the same consideration as a change to your Will.
If Equality is Your Wish, Be Careful About Taxes.
Revocable Living Trusts do not help you avoid taxes, so any change made to your trust might create an unforeseen taxable event. Your death may trigger many different types of taxes. Take into consideration all Income Taxes, Capital Gains Taxes, Inheritance Taxes, Estate Taxes, and others that affect your estate. If you fail to consider all taxes, you may unwittingly create an uneven division of your assets. For example, if you live in a state with an Inheritance or Estate Tax and give a particular gift to one child and the residue to another, the child receiving the residue might be burdened with the tax due on both gifts. Care must be taken to maintain your wishes.
Consider Your Incapacity (Not Just Your Death).
In modifying your Living Trust, be careful that you don’t damage the portion that addresses how you are cared for during your lifetime. Most Revocable Trusts focus only on what happens after you die. Instead, think what would happen if you had a stroke, suffered from Alzheimer’s or some other disease. If so, you no longer could manage the Revocable Trust. Who would step in? Indeed, plan for your potential incapacity! If your Revocable Trust only names a successor trustee, that trustee cannot take over without proof of your incapacity. As a consequence, what could have been a smooth transition could evolve into an expensive court hearing. Instead, consider other alternatives such as naming a current co-trustee. Other options exist, depending on your specific situation.
More Planning Questions?
The Revocable Trust Amendment is only a piece of the Estate Planning process. By all means, if you want to learn more, please read my more detailed article, Estate Planning Everything You Need to Know.
In Conclusion: Revocable Trust Amendment
I hope that this article was helpful in explaining Revocable Trust Amendment. Further, I included links to even more detailed information on my website so you can learn more. Therefore, please contact me and let me know how I did. Certainly, your comments and questions are welcome!
Let our Estate Planning lawyers help walk you through what can be a confusing process. To begin with, call to speak to one of our experienced estate planning lawyers. By all means, our lawyers are ready to answer your questions. In fact, feel free to contact our office for a free consultation. Ultimately our goal is to make the process as painless as possible!
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