Amending an Irrevocable Trust Agreement & Uniform Trust Code

By John Cromwell

Trust law varies based on the state where the trust is located. The Uniform Trust Code (UTC) is a proposed law meant to be enacted across the country to promote legal consistency regarding trusts. The UTC has been enacted in 23 states and covers most trust issues, including how to amend an irrevocable trust agreement. Under the UTC, an irrevocable trust agreement can be amended when the beneficiaries and creator agree to an amendment or when there is a significant change in circumstances surrounding the trust. When attempting to amend an irrevocable trust agreement, consider consulting with a licensed attorney.

Trust law varies based on the state where the trust is located. The Uniform Trust Code (UTC) is a proposed law meant to be enacted across the country to promote legal consistency regarding trusts. The UTC has been enacted in 23 states and covers most trust issues, including how to amend an irrevocable trust agreement. Under the UTC, an irrevocable trust agreement can be amended when the beneficiaries and creator agree to an amendment or when there is a significant change in circumstances surrounding the trust. When attempting to amend an irrevocable trust agreement, consider consulting with a licensed attorney.

Define Irrevocable Trust

A trust is a relationship created by someone who donates property for the benefit of others. The donated property is held and managed by a third party, or trustee, for the advantage of the beneficiaries. This means that while the beneficiaries get the profits generated by the property, it is the trustee that controls the property and maintains it. The trustee is required to manage and distribute the property based on the standards established by the donor when he created the trust. An irrevocable trust prevents the creator of the trust from unilaterally changing any of the trust’s terms. This means he cannot change the beneficiaries, alter the trust’s purpose, or name a trustee on his own initiative. The creator of a trust may make it irrevocable in order to reduce his income or estate tax.

Protect your loved ones. Start My Estate Plan

Amend by Consent

While a creator of a trust cannot unilaterally amend a trust, an irrevocable trust can still be amended under the UTC if all of the beneficiaries and the creator agree to the change. If these parties agree, any amendment can be made regardless of whether the amendment conforms to the original purpose of the trust. If all of the beneficiaries agree and the creator is either unavailable and does not agree, the trust can still be amended under the UTC. However, an appropriate court must find that the amendment is consistent with the original purpose of the trust.

Unanticipated Circumstances and Ineffective Administration

Sometimes during the term of a trust, circumstances can arise that the creator of the trust did not anticipate. In that case, the court may amend the trust if doing so would further the trust’s purpose or make the administration of the trust more practical and less wasteful. Any trustee or beneficiary may initiate a court proceeding to modify the trust in these circumstances.

Uneconomic Trust

If the value of the property becomes so minimal that the current expenses of administration are comparatively excessive, a court may amend the trust. Again, any trustee or beneficiary may initiate a court proceeding to modify the trust when the value of the trust property decreases significantly.

Protect your loved ones. Start My Estate Plan
How to Amend a Trust to Reinstate Prior Provisions

References

Related articles

California Irrevocable Trust Laws

An irrevocable trust is an estate-planning tool designed for the long-term management of assets, which are permanently transferred into the trust. There are several types of irrevocable trusts, but the common denominator is that the settlor – the person who creates the trust -- gives up control and ownership of his property; however, California law does provide for modification of an irrevocable trust under certain circumstances.

Rules Regarding the Distribution of a Trust When a Beneficiary Is Deceased

How a trust is distributed depends on two things: the relevant trust law and the document that created the trust. Trust law varies based on the state where the property is located. The specific rules regarding distribution is defined by the declaration of trust, which is drafted according to the trust creator’s wishes. The three main questions to ask when determining the effect of a deceased beneficiary on a trust are: do the beneficiary’s heirs have a right to the trust; are there any other surviving beneficiaries; and does the creator of the trust want to change the terms.

How to Use a Family Trust to Remove Assets From an Estate

A family trust is created by a parent or parents for their family by placing property in a trust and naming family members as the beneficiaries. When the parents die, the property is not included in the probate estate and the surviving family members are able to use the property immediately. The requirements for properly executing a trust are defined by state laws, which vary. The Uniform Trust Code has been enacted in 23 states as of March 2012. As a result, the UTC represents a good basis to discuss how to properly execute a family trust.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help.

Related articles

What Happens When a Trust No Longer Has Assets?

Trusts must adhere to specific requirements to be valid. All trusts, including living trusts and irrevocable trusts, ...

Can an Heir Sell Property When the Title Is in a Revocable Living Trust?

Revocable living trust property generally cannot be sold outright by a beneficiary; the property must be first ...

Amending a Florida Trust

A trust is an instrument that allows one party, known as the settlor, to contribute assets to the trust and to name ...

Tennessee Law on a Living Trust

A living trust can be used to safeguard your property during your lifetime and help avoid probate at death. In ...

Browse by category
Ready to Begin? GET STARTED