As your life progresses, there may be situations that arise that can grant a modification or termination of your existing trust. Continue reading to discover the difference between a revocable living trust and an irrevocable trust and the ways to modify or terminate each.
If you are looking to modify or terminate a trust, you should first retain the services of an experienced estate planning attorney who will walk you through the process with your best interest in mind. Estate planning can be complex and is not meant to be done alone. To avoid making even the smallest mistakes, contact our firm so we can assist you with every step of your estate planning process. Give us a call today.
What is a revocable living trust?
A revocable living trust is a written document that determines how your assets will be handled after you pass. Assets can include valuable possessions, bank accounts, investments, and real estate. A revocable living trust will be created during your lifetime and the assets that are placed in the trust are transferred to your designated beneficiary after you pass on. You are able to change or cancel a revocable living trust at any time.
What is an irrevocable trust?
An irrevocable trust is a trust created where its terms cannot be modified, amended, or terminated without the grantor’s named beneficiary’s permission. The grantor legally removes all of their rights of ownership to the assets and the trust once they have effectively transferred all ownership of assets into the trust.
When can a trust be modified?
A revocable living trust can be modified or amended as long as the grantor is alive and still retains the capacity to amend or change the trust.
An irrevocable trust can be modified where the trustee can choose to terminate the irrevocable living trust if the trust has assets equalling less than $100,000. It is also possible to terminate an irrevocable trust by a trustee without the court order when the trust has become unlawful contrary to the public policy or impossible to achieve.
The court can modify a trust when there is clear evidence of a mistake in the trust. A trust can also be modified by the court to enhance the material purpose if a situation arises that may not have been anticipated when the trust was initially drafted. The court can modify a trust when all of the trustees and beneficiaries agree to terminate or modify the trust to the extent that the modification or termination does not interfere with the settlor’s original material purpose of the trust.
Contact our experienced Montgomery County, Maryland firm
The attorneys at JD Katz have years of experience compassionately guiding clients in Maryland through the estate planning and administration process. Our firm also has experience with matters of elder law, business law, tax law, and litigation. For a legal team that will put your needs first, contact JD Katz today.