Did you know that you can modify an irrevocable trust? If you did not know this, you are not alone. The name lends itself to that very misconception. However, laws and families change. In some cases, finances frustrate the trustmaker’s original intent. Or, sometimes, the court identifies an error in the trust document. Therefore, when this happens, consider changing the trust, even if that trust is irrevocable.
Three examples when it makes sense to change an irrevocable trust:
Changing Tax Law Warrants Intent to Modify an Irrevocable Trust
Adam created an irrevocable trust in 1980 that held a life insurance policy. Due to the federal estate tax exemption at that time, Adam needed a tool that would remove the value of the proceeds from his estate at his death. To facilitate this, Adam created an irrevocable life insurance trust to own the life insurance policy. It names the beneficiary of the proceeds at Adam’s death. Today, the federal estate tax exemption has significantly increased. Also, Adam no longer needs to worry about removing the life insurance proceeds from his estate to avoid estate taxation at his death.
Changing Family Circumstances Can Enable you to Modify an Irrevocable Trust
Barbara created an irrevocable trust for her grandchild, Christine. Now an adult, Christine has a disability and would benefit from government assistance. According to the current instructions for how money is to be given to Christine, Barbara’s trust would unintentionally disqualify Christine from receiving much-needed government assistance.
Discovering Errors Could Free you to Modify an Irrevocable Trust
David Sr. created an irrevocable trust to provide for his numerous children and grandchildren. However, after the trust was created, his son (David Jr.) discovered that his son (David III) had been mistakenly omitted from the document.
Are you sure your trust is still working for you?
If you are not sure whether an irrevocable trust is still a good fit or if you wonder whether you can benefit more from your trust, we are happy to meet with you so we can analyze your current trust. Perhaps modifying or terminating your irrevocable trust is a good option. Making that determination simply requires a conversation about your goals and a review of the trust itself. Please call our office now to schedule time to review your current trust or discuss the potential benefits that a trust can provide to address your unique situation and goals.
About Skvarna Law Firm in Glendora and Upland, California
Let a skilled attorney assist with your estate plan. So, contact us today to learn about your options (909) 608-7671. We operate offices in Glendora and Upland, California. Therefore, we provide legal services for individuals living in San Bernardino, Los Angeles, Orange, and Riverside Counties. This includes the cities of Upland, Ontario, Rancho Cucamonga, Fontana, Colton, Rialto, Chino, Chino Hills, Glendora, Claremont, Montclair, Pomona, La Verne, San Dimas, Azusa, Covina, West Covina, Diamond Bar, Walnut, La Puente, Corona, Norco & Mira Loma. Visit SkvarnaLaw.com to learn more.
