A revocable living trust, or RLT, is one of the most powerful tools available today for estate planning professionals. When properly used, a living trust can help you avoid probate as well as reduce or eliminate estate taxes by allowing you to separate your assets from your personal estate ahead of time.
Technically, a RLT takes your property and transfers it to another party (the trust) for the benefit of a third party (your heirs). The trustee holds legal titles and your heirs hold equitable titles in the property. The trustee has a fiduciary responsibility to the heirs.
The rules governing trusts are set down when the trust is created. What happens, however, if you change your mind about details of the trust? Is it too late to make changes? Let’s find out.
Revocable or Irrevocable Trust?
When you first set up your trust, you stated clearly that it was revocable or irrevocable. You also stated, if it is revocable, how it can be revoked or amended (modified). Depending on the state, a living trust is revocable unless stated otherwise. In other states, however, it is just the opposite.
An irrevocable living trust usually cannot be modified or revoked.
A revocable living trust can be amended in some states unless the settlor (the person who established the trust) provided otherwise. You should expressly set forth how to revoke or amend or modify a trust if you wish that to be an option.
Virginia has codified requirements to modify or amend a revocable trust and you should consult an attorney for help in meeting these requirements.
Common Methods to Modify a Trust
Those methods include requiring:
- The amendment or revocation must be in writing
- The settlor’s signature must be notarized or witnessed
- The trustee consents to the changes
For a Non-Amendable Trust
There are ways to change a non-amendable trust:
- Revoke the original trust and have the assets transferred to the settlor
- Then create a new trust with provisions to make it amendable
You, as the settlor, must retain the right to revoke the trust.
Sometimes a trust will terminate and at that time you can create a new trust that contains the provisions you wish. Some reasons may include a termination date or the death of a beneficiary. Sometimes state law allows for the early termination of an irrevocable trust, at which time you can create a new trust with the terms you wish.
If you are looking for a law firm in Northern Virginia that can help you make decisions about avoiding probate, contact Virginia Attorneys Flanders and Wade.