What is the Best Way to Make Changes to My Living Trust?
A revocable living trust is a valuable estate planning tool that can be used to transfer assets and property to your heirs upon death without the need for the property within the trust to go through probate. As the name implies, this type of trust can be revoked at any time during the lifetime of the grantor/settler, as opposed to an irrevocable living trust, which cannot be revoked or modified once it is activated.
Setting up a revocable living trust is often a very good option, because as we all know, life happens and there are many significant events that might necessitate the need for the trust be changed. These may include:
- Getting married, in which case you may want to add your spouse as a beneficiary.
- Getting divorced, in which case you may want to remove your ex-spouse as a beneficiary.
- The birth or adoption of a child whom you may want to add as a beneficiary.
- The death of a beneficiary, in which case you would want to remove them from the trust and possibly add their children/grandchildren to the trust in their place.
- Adding or removing any other beneficiaries.
- Changing or adding a trustee or successor trustee.
Important Note: If the trust was drafted properly, it should already allow for the ability to add new property to it without a formal amendment or restatement. After all, the primary purpose of this document is to hold property that is later distributed to designated beneficiaries.
Ways to Change a Revocable Living Trust
If you need to make modifications to your revocable living trust, there are three ways you can go about this:
If you have minor changes that you want to make to your trust and you have not amended anything within the trust in the past, then doing a trust amendment might be the best option. A minor change is one that does not fundamentally alter the terms and conditions of the trust. Examples may include adding or removing a beneficiary or naming a different trustee.
It is important to be very specific about what you are amending, so it is clear when it comes time for the terms and conditions of the trust to be executed. Also be very careful about making too many amendments to a trust over time as this could cause the language to become confused. If you need to make multiple changes to your trust, then restatement might be a better approach.
As we just mentioned, if you have several changes to make to a trust and the result would be that the trust is altered extensively, then a trust restatement is a good way to accomplish this. This option might also make sense if there are any changes to federal or state laws that impact the terms and conditions of the trust.
A trust restatement essentially involves rewriting the trust with a new document that incorporates the changes that you want to make while leaving the other provisions of the original trust in place. It is very important that the document clearly states that this restatement supersedes all other amendments to the trust, and it should also state clearly that you are not revoking it.
The third way to change your revocable living trust is to revoke it altogether and start over. This, however, is an extreme option that should only be exercised as a last resort. Although a trust revocation might accomplish similar results as a restatement, there are some very important differences. First of all, with a revocation, all of the property within the trust reverts back to the original owner and must be retitled. Secondly, legally removing property from a trust can trigger unintended tax consequences which could be avoided by doing a restatement instead.
Consult an Experienced Virginia Estate Planning Attorney
Revocable living trusts should always be set up with the help of a skilled and knowledgeable estate planning lawyer, and they should also be reviewed regularly to help ensure that the terms and conditions of the trust are still in keeping with your estate planning needs. If you need help with a new or existing trust in Virginia, contact Buck, Toscano & Terezkerz by calling (434) 977-7977 or messaging us online. We look forward to serving you!