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.
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.
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.