When you hear about irrevocable trusts you assume that they cannot be changed or modified. Most people think that same thing because of the name. But changes in law, family, trustees and finances make the original intent of the trust difficult or even impossible. An error could be found in the trust documents, making it necessary to make changes to the irrevocable trust.
Below are some examples why an irrevocable trust should and can be modified or terminated.
- Changes in tax law – An irrevocable trust was created by David in 1978 that included a policy for life insurance. Any proceeds from David’s estate were excluded for the purposes of the federal estate tax. Changing tax law has raised the federal estate tax exemption to the point that today this trust would not be necessary.
- Changes in family circumstances – An irrevocable trust was created for Barbara’s grandchild, Christine. But now an adult, Christine has a disability and would be better benefited by government assistance. The trust would disqualify Christine from any government assistance.
- Errors found – An irrevocable trust was created by David, Sr. for his children and grandchildren but it was discovered that one grandchild has mistakenly been omitted from the document.
Are You Sure Your Trust is Still Working for You?
If you’re not sure an irrevocable trust is still a good fit or if you wonder whether you can receive more benefit from a trust, we’ll analyze the trust. Perhaps irrevocable trust modification or termination is a good option. Making that determination simply requires a conversation and a look at the document itself. Please call our office now to schedule a chat.