Did you know that irrevocable trusts can be modified? If you didn’t, you’re not alone. The name lends itself to that very belief. However, the truth is that changes in the law, family, trustees, and finances sometimes frustrate the trust maker’s original intent. Or, sometimes, an error in the trust document itself is identified. When this happens, it’s wise to consider trust modification, even if that trust is irrevocable.
Here are three examples of when an irrevocable trust can, and should, be modified or terminated:
1. Changing Tax Law. Adam created an irrevocable trust in 1980 which held a life insurance policy excluding proceeds from his estate for federal estate tax purposes. Today, the federal estate tax exemption has significantly increased making the trust unnecessary.
2. Changing Family Circumstances. Barbara created an irrevocable trust for her grandchild, Christine. Now an adult, Christine suffers from a disability and would benefit from government assistance. Barbara’s trust would disqualify Christine from receiving that assistance.
3. Discovering Errors. David created an irrevocable trust to provide for his numerous children and grandchildren. However, after the trust was created, his son (Jack) discovered that his son (Frank) had been mistakenly omitted from the document.
Are You Sure Your Trust is Still Working for You?
If you’re not sure an irrevocable trust is still a good fit or if you wonder whether you can receive more benefit from a trust, we’ll analyze the trust. Perhaps irrevocable trust modification or termination is a good option. Making that determination simply requires a conversation with us and a look at the document itself.
If you want to ensure that your family is cared for, please click here to schedule your complimentary Estate Planning Strategy Call with San Francisco’s premier estate planning attorney, Matthew J. Tuller.