How You Can Modify an Irrevocable Trust
You can likely change an irrevocable trust that no longer makes sense for your situation, whether economically or practically. Common reasons people choose to modify an irrevocable trust include changing beneficiaries, changing trust protectors, changing governing laws, moving the trust to a new state, changing the trustee and minimizing income or estate taxes.
There are several methods to modify irrevocable trusts. The right method for your situation depends on a variety of factors, including the trust agreement terms, the current beneficiaries, governing laws and the length of irrevocability. In some cases, it might not be possible to modify an irrevocable trust, while in others it could be quite difficult.
Below are some possible routes to making those modifications:
- Judicial reformation: With this method, you go to court and ask the judge to determine the intent of the trust maker was frustrated and that a restating of the trust is necessary to fulfill the intent.
- Judicial/non-judicial conversion: In conversion, you use the provisions of the trust agreement or state law to convert a principal and discretionary income trust into a mandatory unitrust (or vice versa).
- Modification: In a modification, you change the trust’s terms by an agreement or a court order to meet the intent of the trust maker. You must be able to show an unforeseen change of circumstance frustrated the intent of the trust maker.
- Decanting: The process of decanting involves taking the funds out of an existing trust and distributing them into a new trust that has more favorable terms.
- Invoking the trust protector: The provisions of trust protectors allow third-party trust protectors to use specific powers of modification as outlined in the existing trust agreement.
For more information on modifying an irrevocable trust in Florida, work with a dedicated Tampa estate planning lawyer at BaumannKangas Estate Law.