California Trust & Estate

Who Can Change My Trust After I Die?

When some people think of trusts, they may believe they are only a vehicle for the super-rich to pass on their wealth to generations. However, a living trust is a helpful estate planning tool for any person putting together an estate plan, regardless of the overall value of their assets. Living trusts are often established to protect an individual or couple’s assets during their lifetime, by appointing a trusted friend or family to administer their assets should they become incapacitated, and to pass on their assets to their children or heirs after death in a manner that is less expensive and time consuming than the probate process.

However, some people may have questions about what could happen to their trust after their death, for instance, common questions include:

  • can a successor trustee amend a trust?
  • can a revocable trust be broken?
  • what’s the process for a living trust amendment?
  • can a living trust be revoked?
  • how does an heir go about dissolving a revocable trust?
  • who can change my trust after I die?

This article will address some of those common questions and concerns about what might happen to your trust after your death.

Breaking a Trust Versus a Trust Contest

Typically, the only way to “break” a trust is when the creator of that trusts makes to decision to dissolve the trust. If you have established a living trust for your benefit and the benefit of your beneficiaries and heirs after your death, the heirs and beneficiaries cannot break your trust. The only remedy they will have available should they decide there is a problem with your trust is a trust contest. Similar to a will contest, a trust contest requires a court of law to determine whether there are legal grounds to set aside the trust. The issues that would allow the court to set aside a trust after the death of the grantor would normally include issues such as fraud or undue influence. Even if the trust contest is successful, the court may not set aside or overturn all portions of the trust, but only the provisions impacted by the issue will be overturned by the court.

Revocable VS Irrevocable Trusts

There are two types of living trusts that you can create: a revocable trust or an irrevocable trust. Revocable trusts can be undone by the grantor at any point in their lives, so long as you are legally sound to make such a decision. As a result, the grantor retains full control over the assets owned by the trust during the grantor’s lifetime. The grantor for these types of trusts typically acts as both the beneficiary and the trustee during the life of the grantor. However, a successor trustee is typically named to provide management of the trust assets should the initial trustee be unable to fulfill the duties of trustee in the event of death or incapacitation. While the grantor acts as the trustee of a revocable living trust, the grantor can transfer property in and out of the trust at will. This type of trust allows your heirs to avoid probate upon death, but they do not protect the assets from the creditors of the grantor.

By contrast, irrevocable trusts help shield the grantor’s estate from creditors and taxation. However, while irrevocable trusts do offer those added benefits, they do come with a key disadvantage to the grantor – the grantor no longer has control of the assets placed into an irrevocable trust. When setting up an irrevocable trust, the grantor must appoint another party to serve as trustee and to manage the trust and its property. As it’s name suggests, you cannot change your mind and make changes to or undo an irrevocable trust once you have established it, even if it is no longer serving the purpose you designed it for. However, in certain circumstances, the law does allow the revocation of an irrevocable trust.

Revoking an Irrevocable Trust

Some states, like the state of New York, may allow the trustee of an irrevocable trust to revoke the trust or amend its terms if the trustee can secure the agreement and signature of all the beneficiaries of the trust. If any of the beneficiaries are minors, they will not be legally able to consent to any changes, but a court may agree to waive the requirement of obtaining the signatures as pertains to minors so long as the trustee can evidence to the court that the change requested will not be prejudicial to the minor beneficiaries’ interests.

In other states, such as the state of New Jersey, the court may be able to oversee amendments or reformation of an irrevocable trust, but it won’t allow the trustee or beneficiaries to revoke the trust completely. In those situations, a legal action must be filed with the court setting forth and evidencing a legitimate reason to reform the trust. Such legitimate needs may be an unforeseeable change in the needs of one or more of the beneficiaries or the illness or disability of a beneficiary. However, courts do not take such actions lightly, and the trustee will be expected to produce evidence of the hardship or change in question.

Other states simply will not allow the modification or revocation of a trust that has been set up as an irrevocable trust, regardless of the changing circumstances or needs of the beneficiaries. One workaround that is sometimes used in those situations is to have the trustee dissolve the trust after transferring the assets of the trust into a new trust with more favorable trust terms. This is typically only able to be accomplished if the language in the original trust allows for such changes and if the state laws in question provide for this type of workaround.

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Who Can Change My Trust After I Die?

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