YES, YOU CAN CHANGE AN IRREVOCABLE TRUST!
Irrevocable trusts can be a great way to protect assets. Irrevocable trusts can also preserve assets from Medicaid estate recovery, protect a supplemental needs beneficiary's eligibility for special programs, or reduce a grantor's taxable estate. But the word "irrevocable" can be scary.
What if you set up an irrevocable trust and then change your mind later because your circumstances have changed? What if an irrevocable trust set up 15 years ago no longer fits the current tax laws or a beneficiary's situation? Is there any way to make a change to an irrevocable trust? In a word - yes!
The good news is, there are several ways to change an irrevocable trust with the assistance of an estate planning attorney in North or South Carolina. Some of these ways can be built into the design of the trust at the outset. Others are based on the applicable state's trust code and the powers of courts to modify and terminate trusts.
Here are some ways to modify an irrevocable trust in North and South Carolina.
1. By consent of the grantor and all beneficiaries. If the grantor is alive and consents to a change and all the beneficiaries consent, then, in certain cases, the trust can be changed.
2. By consent of all the living beneficiaries. If the grantor is no longer alive, the beneficiaries may be able to petition a court for an order modifying or terminating the trust.
3. By using a trust protector to amend the terms of the trust to comply with current tax laws or to correct a scrivener's error.
4. By a process called "decanting." A trustee may be able to use state decanting laws to pour the assets from one trust into a new trust that is created for the same beneficiaries but with more favorable tax or other administrative provisions.
Naturally, the best course of action is to make a well-considered decision before setting up an irrevocable trust. However, it's impossible to foresee everything that could happen in the future and it is reassuring for clients to know if a problem arises later, there are ways to change an irrevocable trust. To learn more, take a look at our valuable estate planning book, checklist, and articles full of tips and helpful information. They were written by me for residents of North and South Carolina. To learn more about estate planning and trusts, request your free download of my book by clicking on the link on this page.