How to Keep Living Trusts Updated

by John Cromwell

The process for updating a living trust depends on its type. There are two types of living trusts: revocable and irrevocable. A revocable trust allows its creators, or grantors, to change its terms at any time, while an irrevocable trust only permits change under certain circumstances. Despite the lack of control over trust property, a grantor may make a trust irrevocable to minimize taxes and protect against creditors. State law defines how a trust is to be organized and managed, so standards vary. The Uniform Trust Code has been adopted by 23 states as of April 2012. As a result, it offers the best framework to discuss general principles on how a grantor can update living trusts.

Revocable Trust

Step 1

Check the trust agreement. The trust agreement is the definitive standard of how the trust is to be amended or changed. If provided, follow the process detailed in the agreement regarding changing the terms of the trust.

Step 2

Draft a document detailing what changes the grantor wants to make to the trust. The document must demonstrate, clearly and convincingly, that the grantor wanted to change the trust. To ensure the grantor's intent is clear, consider having the grantor sign the document in the presence of witnesses who sign as well.

Step 3

Promptly notify the trustee and beneficiaries of the changes made to the trust. A document detailing the changes to the trust should be delivered to these parties in a reasonable manner based on the circumstances. Possible methods include hand delivery or by first class mail.

Irrevocable Trust

Step 1

Determine how you want to alter the trust. If you want to change the terms because of unanticipated circumstances that have made the terms of the trust unreasonable, you may be able to modify the trust. Reasons the court will accept for modifying the trust are the terms are impractical, wasteful of the trust property, impair the trust’s administration, or are too costly to administer. The court will also consider modifying the trust terms if you can show that modifying the trust will further its purpose.

Step 2

Gain the support of all of the beneficiaries. If the grantor and all of the beneficiaries agree to the change, an irrevocable trust will be modified.

Step 3

File a petition with the local court to change the trust. Any change in an irrevocable trust generally requires approval by the appropriate court. Include in your petition the reason why the trust needs to be modified. If you have obtained all of the beneficiaries' consent to the modification, the court will automatically approve the adjustment. Notify all of the trustees and beneficiaries of the trial.