You've set up a trust, but you've got some corrections in mind. As the grantor of the trust, you may have the legal right to create an amendment of the terms of the trust or the instructions to the trustee. Several different factors come into play: whether or not the trust is revocable, what kind of change you want to make and what your state's trust laws say about the matter.
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Using a Trust
A trust is a legal and financial structure that allows you to place assets under the control of a trustee. As the grantor of the trust, you can name beneficiaries and instruct the trustee on who is to receive trust assets and when. If a trust is recognized as valid under state law, it will escape the complex and often expensive process of probate court and the court's supervision of inheritance. Trusts don't escape income taxes but they will allow you to shelter a limited amount of assets from estate tax upon your demise.
Amending a Trust
Many trusts give the grantor the right to amend the trust as he sees fit or revoke it altogether. With such a "revocable" trust, the grantor can make corrections, name new beneficiaries, revise instructions to the trustee, name himself as trustee or replace the trustee. A trust may also set some limits on changes that may require the trustee's written permission, such as increasing the duties of a trustee. An "irrevocable" trust, however, is subject to limits on changes. In Iowa, for example, a grantor may change an irrevocable trust only with the written consent of all the beneficiaries. In most cases, changes or corrections are accomplished by drawing up and signing an amendment to the trust.
The Internal Revenue Service does not regulate trusts and sets no rules on how a grantor can draw up, correct or change a trust. The agency's rules deal with the income generated by trusts and whether that income is taxable. A trustee is normally responsible for filing a tax return for the trust and accounting for its expenses and income. IRS examiners are familiar with a range of "abusive trust" schemes, which allow their grantors to control assets and income while avoiding personal taxation. A grantor may set up a charitable trust that pays for his own family's educational expenses, for example, and the trust then claims the expenses as a deduction and distributes its net income back to the grantor. The IRS may audit a trust if it suspects a tax evasion scheme.
Restatement of Trust
If a grantor has several corrections or amendments to make, a restatement of the trust might present an easier solution. A restatement is a revised version of a revocable or irrevocable trust that contains all the particulars of the original trust along with changes and corrections. With a restatement, the trust keeps its original name and, legally, remains the same entity. Any restatement or amendment still must conform to state law. Oregon, for example, allows changes to an irrevocable trust with the consent of the grantor and all beneficiaries but requires the attorney general to consent to any changes to a charitable trust.