When to Change Your Living Trust
Anytime there is a considerable change that impacts your life or property, it’s time to go over your estate plan to establish if you are required to modify your living trust.
A lot of lawyers and financial advisors recommend that in relation to estate planning, you need to go over your estate plan every 3 to 3 years. At the end of the day, things change, meaning you should review your will and any living trusts to guarantee that they include everything you wish them to. It’s also sensible to go over them routinely to make sure they’re current.
Modifying a living trust is not as hard as it appears to be, but it does take some preparation. What looked like a good idea two days ago may not be what you need should certain circumstances change.
When Should You Change a Living Trust?
Living trusts often called a revocable trust, can be modified at any time. It is wise to review and change your living trust when you have had a considerable change in your life. These considerable changes might include:
- Getting married
- Getting divorced
- Having a baby or adopting a child
- The passing away of a beneficiary
- Your inclination to change:
A beneficiary, or to addition of a beneficiary
The trustee or successor trustee
How the property is allocated
Which property is a part of the trust
- Having obtained new property that you want to place into the trust
- Having moved to a different state in which the inheritance laws are different
This is not an exclusive list. There might be a lot of other situations that are going to justify modifying your living revocable trust. When you are unsure whether your situation justifies a living trust modification, go over your situation with a trusts and estates lawyer.
Why Considerable Life Changes Require an Examination of Your Trust
Considerable life changes, like some listed above, might not require you to modify your revocable living trust. They should, nevertheless, raise a red flag for you to go over the trust to see how it affects your new situation.
For instance, when you are newly divorced and your ex-spouse is still a beneficiary of your living trust, they can inherit your property should they outlive you. You should modify your living trust right away so that your ex-spouse is no longer a beneficiary.
Similarly, a revocable living trust modification is important when you obtain new property, especially when the property is costly. Modifying the living trust is vital if you want to include that costly property in the trust and stop it from going to probate.
How Do You Modify or Revoke a Living Trust?
Revoking or modifying a revocable living trust can be accomplished with or without a lawyer. You can modify a living trust devoid of to go to court. There are a couple of ways to do this. You can do it on your own, utilizing living trust forms you can find online, you can use a service online, or you can get help from a lawyer.
If you created your document using an online service, you should be able to modify it through them for a small fee. Many services might even modify it for no fee at all should you have a subscription. Working alongside a lawyer is also a choice, although usually, it’s the most costly one. When you currently have a living trust that you initially created with the help of a lawyer, you might want to discover a more convenient and cost-effective option. Sometimes, in these situations, it might be more cost-effective to revoke a trust and devise a new one.
Steps for Modifying or Revoking a Living Trust
Below are the steps for modifying or revoking a living trust:
- Locate living trust forms online. There are a lot of various forms for modifying a revocable living trust online. There’s nothing of the sort as one right form, so choose a form you like and that is going to be easily used. When using an online service, they might already have the forms for you.
- Be as straightforward as you can. You are going to want your successor trustee to comprehend how to allocate your property. No specific terminology is needed to modify the trust if you indicate the name of the trust, the date, and precisely what you are modifying—whether adding or removing.
- Include explicit language. You are going to want to write somewhere in your modification if this is an addition to the trust, or if it replaces something in the initial trust. Take this as a guideline to the successor trustee so that your intentions are going to be carried out properly.
- Have the modification notarized. Wait until you sign the modification in the presence of a notary. When it’s a joint trust with your spouse, be sure both of you sign the modification and have each of your signatures notarized. There is typically a fee for each signature, so be ready. Attach the modification document to the initial trust document.
- Keep your trust documents and modification together in a secure location. Any location you kept your initial trust document, you are going to want to keep your modification. Make sure you choose a location that is going to be easy for your successor trustee to gain access to. There are services online that can store important documents like these for you. Or you can keep them in the office of your lawyer. Overall, you don’t want to have your trust or modification in a safety deposit box except for you transferring the safety deposit box to your living trust. When you don’t, the documents of the safety deposit box are going to be locked by the probate court throughout probate procedure and your trustee is not going to have access. Neglecting to place the safety deposit box into the trust can create more time and cost.
- As an alternative, initiate what is referred to as a restatement of the trust. If there are considerable changes that must be made, it might be wise to do a restatement of trust. This doesn’t rescind the initial trust but recreates it so you keep the initial trust with the property that is presently in it. It enables the trust to be recreated as a new document with the required changes, in which bypasses the confusion of a modification.
- Revoke the trust. You are able revoke a revocable trust any time you wish. You have the option of carrying out a restatement of the trust or revoking it when there are multiple changes that must be made. Speak with an estate planning attorney to determine which option is best for you.
Can I Amend or Revoke My Irrevocable Living Trust?
Whereas a revocable trust enables you to maintain ownership and management of your assets, an irrevocable trust is not going to. Many people create this kind of trust under the advice and guidance of an attorney for specific reasons. If you create an irrevocable living trust, it overall, cannot be revoked or modified. Nevertheless, it may be achievable to do so with the assistance of an estate planning attorney. This is going to have to be carried out in court unless the beneficiaries and trustee all consent to the modification. The possibility of success in revoking or modifying an irrevocable trust in court is going to subject to the laws in your state and on the provisions of the irrevocable living trust.
A revocable living trust becomes irrevocable upon the passing away of the grantor and overall cannot be modified.
Being aware of when to modify your living trust is priceless for your overall estate plan. Any significant life changes should provoke an examination of your estate plan. Maybe your trust and will are fine the way they are, but major life changes should trigger you to go over your estate plan to determine if you need to take the next step. When unsure, speak with an estate planning attorney.
When to change your living trust. LegalZoom. (n.d.). Retrieved February 17, 2023, from https://www.legalzoom.com/articles/when-to-change-your-living-trust
There’s nothing better than the peace of mind you will have knowing you’ve protected your family at a time when they need it most. Let us help. Schedule a consultation or contact Ogborne Law, PLC of Arizona today.
You’ve worked hard for your life, and you need to protect it. You owe it to your family and your legacy to take care of planning now. Contact Ogborne Law to schedule your estate-planning session.