Revocable living trusts are one of the best estate planning tools available to most people. These trusts allow you great flexibility in not only selecting who receives your property after you die, but also in avoiding probate and reducing potential estate tax issues. However, there are specific laws which apply to creating and using a revocable living trust, and if you want to make changes to the trust after you make it, you must be sure to do so properly. Here’s what you need to know.
Amendments and restatements
Changing the terms of a living trust is often not difficult, but depending on the situation, different changes may require different solutions. For minor changes, such as amending the trust to include a newly born child, it’s usually enough to simply make an amendment to the trust terms. However, if you want to make more significant changes, or even multiple minor changes, you may need to create what is known as a restatement. A restatement is essentially a rewriting of the terms of the trust but differs from a new trust by keeping the name and date of the old trust. This avoids having to re-title assets that are already held in the name of an existing trust.
Many married couples create a joint living trust. In this situation, if either of the spouses wishes to change the terms of the trust they may only be able to do so if the other spouse agrees to that change. Whether you want to make an amendment or a restatement, both spouses may have to agree to the change in terms if you created a joint trust. Whether or not spousal consent is required often involves determining whether the change involves separate property or community property.
Do not attempt to modify an existing will or trust without first consulting with an experienced and qualified estate planning attorney. Too many do it yourself amendments are invalid and may cause the entire will or trust to be submitted to a judge for interpretation of the validity of the change and the proper interpretation of the amendment. These court proceeding will most likely be many times the cost of having an experienced and qualified attorney prepare a valid and coherent amendment.