Most lawyers and financial advisors suggest that when it comes to estate planning, you should review your estate plan every three to five years. After all, things change, which means you should review your will and any living trusts to ensure that they include everything you want them to include. It's also advisable to review them regularly to make sure they're current.
Changing a living trust is not as difficult as it sounds, but it does take some preparation. What looked like a good idea yesterday may not be what you need if certain circumstances have changed.
When Should You Amend a Living Trust?
Living trusts sometimes referred to as revocable trusts, can be changed at any time. It is a good idea to review and change your living trust when you've had a significant change in your life. These major changes could include:
- Birth or adoption of a child
- Death of a beneficiary
- Your desire to change:
- A beneficiary, or to add a beneficiary
- The trustee or successor trustee
- The way the property is distributed
- Which property is part of the trust
- Your name
- Having acquired new property that you want to add to the trust
- Having moved to another state where the inheritance laws are different
This list is not exhaustive. There could be many other situations that will warrant changing your living revocable trust. If you are not sure whether your situation warrants a living trust amendment, discuss your situation with a trusts and estates attorney.
Why Significant Life Changes Require a Review of Your Trust
Significant life changes, such as those listed above, may not require you to change your revocable living trust. They should, however, raise a red flag for you to review the trust to see how it relates to your new situation.
For example, if you are recently divorced and your former spouse is still a beneficiary of your living trust, the former spouse can inherit your property if he or she outlives you. You should change your living trust immediately so that your former spouse is no longer a beneficiary.
Likewise, a revocable living trust amendment is important if you acquire new property, especially if the property is expensive. Changing the living trust is crucial if you want to include that expensive property in the trust and prevent it from going to probate.
How Do You Amend or Revoke a Living Trust?
Revoking or amending a revocable living trust can be done with or without an attorney. You can amend a living trust without having to go to court. There are a few ways to do this. You can do it yourself, using living trust forms you find online, you can use an online service, or you can use an attorney.
If you created the document through an online service, you should be able to amend it through them for a small fee. Some services might even amend it for no fee at all if you have a subscription. Working directly with an attorney is also an option, although generally, it's the most expensive one. If you already have a living trust that you originally created with the help of an attorney, you may want to find a more convenient and affordable option. Oftentimes, in these circumstances, it may be more cost-effective to revoke a trust and create a new one.
Steps for Amending or Revoking a Living Trust
Here are the steps for amending or revoking a living trust:
1. Find living trust forms online. There are many different forms for amending a revocable living trust online. There is no such thing as one correct form, so pick a form that you like and that will be easy to use. If you use an online service, they should already have the forms for you.
2. Be as clear as possible. You want your successor trustee to understand how to distribute your property. No specific language is needed to amend the trust so long as you specify the name of the trust, the date, and exactly what you are changing—whether adding or deleting.
3. Include specific language. You'll want to write somewhere in the amendment whether this is an addition to the trust, or whether it replaces something in the original trust. View this as an instruction to the successor trustee so that your intentions will be carried out properly.
4. Have the amendment notarized. Wait to sign the amendment in the presence of a notary. If it's a joint trust with your spouse, make sure both of you sign the amendment and have each signature notarized. There is usually a fee for each signature, so be prepared. Attach the amendment form to the original trust document.
5. Keep your trust document and amendment together in a safe place. Wherever you kept your original trust document, you'll want to keep your amendment. Be sure you pick a place that will be easy for your successor trustee to access. There are online services that will store important documents such as these for you. Or you can keep it in your lawyer's office. In general, you don't want to keep your trust or amendment in a safe deposit box unless you transfer the safe deposit box to the living trust. If you don't, the contents of the safe deposit box will be sealed by the probate court during the probate process and your trustee won't have access. Failure to put the safe deposit box into the trust can cause additional time and expense.
6. Alternatively, do what is called a restatement of the trust. If there are substantial changes that have to be made, it might be better to do a restatement of trust. This does not revoke the original trust, but recreates it so you keep the original trust with the property that is already in it. It allows the trust to be rewritten as a new document with the necessary changes, which avoids the confusion of an amendment.
7. Revoke your trust. You can revoke a revocable trust at any time. You have the option of doing a restatement of the trust or revoking it if there are numerous changes that need to be made. Consult an estate planning attorney to find out which option is best for you.
Can You Amend or Revoke an Irrevocable Living Trust?
While a revocable trust allows you to maintain ownership and control of your assets, an irrevocable trust does not. Some people create this type of trust under the advice and guidance of an attorney for particular reasons. By definition, if you establish an irrevocable living trust, it generally cannot be revoked or changed. However, it may be possible to do so with the help of an estate planning lawyer. This will have to be done in court unless the trustee and beneficiaries all agree to the change. The likelihood of success in revoking or changing an irrevocable trust in court will depend on the laws in your state and on the terms of the irrevocable living trust.
A revocable living trust becomes irrevocable upon the death of the grantor and generally cannot be changed.
Knowing when to amend your living trust is invaluable for your overall estate plan. Any major life changes should trigger a review of your estate plan. Maybe your trust and will are fine "as is," but significant life changes should prompt you to review your estate plan to decide if you need to take the next step. When in doubt, check with an estate planning attorney.