Despite their name suggesting otherwise, irrevocable trusts can indeed be modified. Changes in laws, family circumstances, trustees, or financial situations can often conflict with the original intent of the trust. In cases of identified errors or evolving situations, it’s prudent to consider alterations to an irrevocable trust to ensure alignment with the trustmaker’s intentions.
Here are three examples of when an irrevocable trust can, and should, be modified or terminated:
- Changing tax law. In 1980, Adam established an irrevocable trust to hold a life insurance policy, aiming to exclude its value from his estate due to the federal estate tax exemption of that time. Now, with a substantial rise in the federal estate tax exemption, Adam no longer requires the trust to safeguard the life insurance proceeds from estate taxation upon his passing.
- Changing family circumstances. Barbara established an irrevocable trust for her grandchild, Christine. However, as an adult with a disability, Christine could lose crucial government support due to how the trust is set up, unintentionally disqualifying her from much-needed assistance.
- Discovering errors. David Sr. set up an irrevocable trust to support his many children and grandchildren. However, after its creation, his son, David Jr., realized that his own son, David III, had been accidentally left out of the trust document.
Are you sure your trust is still working for you?
If you’re uncertain about your irrevocable trust’s suitability or wonder if there are better ways it can benefit you, we’re here to help. Let’s meet to review your current trust—modifying or terminating it might be a viable option. This decision only needs a conversation about your goals and a review of the trust. Please contact our office to schedule a review or discuss how a trust can address your specific needs and goals.
At Cheever Law, APC, we don’t just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love, starting with a valuable and educational Life & Legacy Planning Session. This will allow you to get more financially organized and make the best choices for the people you love. If you have already completed your estate plan, we will review that plan at your Life & Legacy Planning Session to ensure that it will work the way you intend and address any holes or gaps that may be present if circumstances have changed since you executed your plan.
To learn more about our one-of-a-kind systems and services, contact us or schedule a no-obligation 15-minute introductory phone call today.