Is Amending a Living Trust Possible? Four Facts You Should Know

Estate planning is a necessary process that will help you determine how you will manage and distribute your assets. If you are in the middle of estate planning, you may wonder two things. You may need to know how to set up a living trust and whether it is possible to amend one. In this article, we will cover both of these queries. Read on for all the crucial facts on amending living trusts.

What Are the Two Main Types of Living Trusts?

If you are new to estate planning, you may not know that there are two main types of living trusts – revocable trusts and irrevocable trusts. Here is an explanation of how these two trusts are different.

What are revocable living trusts?

A revocable living trust is a modifiable legal document that sets out how you will distribute your assets (during your lifetime and when you pass away). The majority of living trusts are revocable because they are more flexible. In other words, if you are of sound mind, you can change a revocable trust during your lifetime.

What are irrevocable living trusts?

An irrevocable living trust is an unmodifiable legal document that stipulates how you want to distribute your assets during your lifetime and after you pass on. You cannot change an irrevocable living trust unless you go through the courts or have complete consent from your beneficiaries.

With an irrevocable living trust, you must rescind rights to amend the trust and hand legal ownership to a trustee.

4 Facts to Know About Amending Revocable Living Trusts

Amending revocable living trusts does not have to be complicated. Since it helps to know what is possible and how to change them, here are four facts you should know about amending revocable trusts.

Removing beneficiaries from revocable living trusts

Removing beneficiaries from revocable living trusts is possible – they are flexible and easier to establish or change compared to irrevocable trusts. You can also designate new beneficiaries and determine how you want to manage the assets described in the living trust.

Main disadvantages of using revocable trusts

One of the main disadvantages of using revocable trusts is that you cannot fully protect your assets or safeguard them from taxes. This disadvantage does not apply to irrevocable trusts; when you include assets, you can minimize estate taxes and safeguard them from creditors.

Remember that after you pass away, the assets stipulated in your revocable trust are subject to federal taxes.

Use a trust amendment to change revocable trusts

It is relatively easy to change revocable trusts using a trust amendment. The trust amendment you use must be valid under your state’s law, and you must sign it to make the changes. You can also sign a revocation of the previous trust agreement and reassign the assets to yourself before you reallocate the assets to the new revocable living trust.

Price of amending revocable trusts

Revocable trust amendment fees can differ. They will depend on whether you want to just make an amendment or restate the trust, and attorney fees can also affect the cost. You may expect to pay between $350 and $1,000

Can Your Spouse Revoke a Revocable Living trust?

Your spouse can revoke a revocable living trust if you have created the trust together, manage it jointly, and are co-grantors. To change provisions in the revocable living trust, you must agree and document them in writing.

What Does Decanting a Trust Refer to?

Decanting a trust refers to the process of moving assets to a new trust so a beneficiary can receive the benefits. A trustee may aim to decant a trust due to state law changes or tax purposes.

How Can You Restate a Trust?

To restate a trust, you must create a document stipulating that the changes are not part of a revoking process. With this document, you will not have to take any assets out of the trust and return them as required during a trust revoking process.

How Can You Manage Assets in a Revocable Trust when You Pass Away?

When the owner of a revocable trust passes away, a trustee will determine how their assets are distributed. The trustee is legally obligated to handle the trust according to the guidelines established at the time of the trust’s creation.

Amending Revocable Trusts: What You Should Remember

When amending revocable trusts, remember that you can make modifications anytime during your lifetime and that your spouse can make changes if they are a co-grantor. Trust amendments make it relatively easy to amend revocable trusts, and you can use this process to remove beneficiaries or designate new ones. Always observe the legal stipulations of your state when making amendments to a revocable trust, and remember to follow the law.