How Often Should I Review Or Update An Estate Plan?
It is recommended to review and update an estate plan any time there is a change in life circumstances (e.g. a loved one passes away or a beneficiary becomes disabled) or a change in the law that affects how the estate plan is interpreted or administered.
Although an irrevocable trust is unchangeable, most states have a provision that allows a person to petition the court to modify an irrevocable trust if it becomes impractical or if circumstances have changed that were not anticipated by the state law. In some cases, consent from all affected parties might be sufficient to change an irrevocable trust. However, it is much more difficult and expensive to have an irrevocable trust changed than to have a revocable trust changed.
What Are Potential Remedies For Trusts That Are No Longer Working?
If there is a problem with a revocable trust, an amendment to the trust document can be made in order to fix the problem or revoke the trust. If there is a problem with an irrevocable trust, the court can be petitioned to allow for a change to that trust, which may be granted if the trust has become impractical or if circumstances have changed that were not anticipated by the state law.
When Can A Trust Be Terminated?
A revocable trust can be terminated by taking the assets out of the trust and revoking it. This is sometimes done during the divorce between two people who previously created a revocable trust together.
Some trusts terminate by their own terms. For example, if the assets in the trust have been distributed and there’s nothing further for the trust to administer, then its terms have been carried out and the trust would be terminated.
Does Modifying A Trust Create More Challenges For The Estate In The Future?
If a trust is terminated by its own terms as a result of the distribution of all assets, then the beneficiaries of those assets may need to set up their own estate plans, which may include a trust. Some trusts are designed to hold assets in trusts for the beneficiaries to avoid this problem. In addition, trusts can be designed to protect the beneficiaries’ assets from creditors and spouses. If divorcing spouses terminate a trust that they created together, then each spouse would have to create a new, separate trust in order to avoid probate at a later time.
For more information on Reviewing/Updating An Estate Plan, a free consultation is your next best step. Get the information and legal answers you are seeking by calling (720) 805-3444 today.
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