An effective estate plan is essential to caring for our loved ones once we pass. Estate plans let us control how we wish to distribute our assets and property. They can also maximize the benefit provided to beneficiaries.
Trusts are often an integral aspect of a well-informed estate plan. They offer increased flexibility and can be structured to avoid many court costs associated with probating an estate. Additionally, trusts allow us more precise control over how our wealth will be distributed.
Some assume that trusts are costly, and then difficult to change once we execute them. This assumption is false. Depending on the type of trust and aspects of your estate plan, there are many options for modifying a trust once it has been established.
To learn more about how to modify a trust, Beller Law, P.L., can provide information and assistance in updating your estate plan and trust. Our firm prides itself on educating clients to make informed decisions while crafting an air-tight estate plan. We work diligently to help our clients accomplish their estate planning goals. Contact us today for more information.
The Difference Between a Revocable Living Trust and an Irrevocable Living Trust
The type of trust you have established will affect the steps you must take to make modifications. Revocable and irrevocable living trusts are among Florida’s most common forms.
Revocable Living Trusts
A revocable living trust allows you to transfer ownership of your assets to the trust and retain control over them. This type of trust provides the greatest amount of flexibility over your assets. The grantor, or creator, of a revocable living trust can add or remove assets from the trust, change the trust, or dissolve the trust at any time.
Irrevocable Living Trusts
An irrevocable living trust is structured differently and is an agreement between the grantor, trustee, and beneficiaries. Due to other individuals being parties to the agreement, an irrevocable living trust can only be modified under specific and limited circumstances and provides little to no control over the assets in the trust once it has been established.
How To Modify a Revocable Living Trust in Florida
Since the grantor, or creator of the trust, maintains control over a revocable trust and its assets, modifying these trusts is fairly straightforward. However, it is essential to remember that improperly executing a modification can invalidate the trust.
There are three primary ways to modify a revocable trust in Florida: amend the trust, restate the trust, or revoke it altogether.
Amending a Trust
Trust amendments are appropriate when the grantor wishes to make relatively minor alterations, such as changing a successor trustee or clarifying ambiguity in a clause.
The amendment typically explains the affected clauses and the desired changes in detail, and then must be executed in the same way the original trust was executed. Typically, an experienced attorney performs this step to reduce the potential for creating legal ambiguities.
Restating a Trust
Restating a trust is often the best way to enact major changes. A restatement is a rewritten version of the entire document with the desired changes included. In other words, a restatement preserves the original trust while changing its terms. It is essential to clearly indicate that you are restating the trust and not revoking it. Once the restatement is finished, it must be executed properly.
Revoking a Trust
In rare cases, a grantor may want to revoke the trust altogether. When a grantor revokes a trust, the ownership of assets in the trust reverts to the grantor. All titles to any property in the trust need to be changed. There can also be tax implications by revoking a trust. Further, if you desire to create a new trust, you must transfer every asset again into the new trust. This process can be expensive and time-consuming. If you are considering revoking your living trust, you should speak with an experienced lawyer to fully explore all of your options.
Modifying an Irrevocable Living Trust in Florida
It is much more difficult, but not impossible, to modify an irrevocable trust in Florida.
One option is to get everyone who is a party to the trust to agree to the relevant changes. Usually, this can only be accomplished when everyone benefits from the changes. Once these changes are made, every relevant party must sign off on the changes for them to take effect.
A second option is to use provisions within the irrevocable trust to enact changes. For example, many charitable trusts contain provisions that allow the trust to be modified if tax laws change. When drafting an irrevocable trust, it is helpful to predict what changes might be required in the future and to add provisions for those changes to be made.
Finally, several statutes in Florida allow courts to modify irrevocable trusts under specific purposes. Florida Statutes § 736.04115 enables the court to change a trust if the modification is in the best interest of beneficiaries. However, this statute puts a number of limitations on the court’s ability to make changes. Fla. Stat. § 736.04114 gives the court authority to modify an irrevocable trust due to changes in federal tax law. Finally, Fla. Stat. § 736.04113 lets the court adjust a trust if the trust’s purpose has become illegal, if provisions of the trust interfere with the purpose of the trust, or if a material purpose of the trust no longer exists.
Either a trustee or qualified beneficiary can file an application for a trust to be modified by the court. Pursuing changes to a trust in this manner can be complicated and time-consuming. If you are thinking about pursuing a modification through the courts, it is best to consult with an attorney.
Beller Law, P.L. Knows How To Help
If you are considering creating or modifying a trust, Beller Law, P.L., can help. With over 25 years of experience assisting clients to prepare for the future, we can meet all of your estate planning needs. Our firm cares about every client and works diligently to craft effective estate plans that best capture their individual needs. Schedule a consultation with Beller Law, P.L., today to learn more about creating or modifying your estate plan.