Can I change or revoke my trust after it’s been created?
Whether you can change or revoke your trust after it’s been created depends on what type of trust you created.
There are two broad categories of trusts:
Revocable Trusts
Irrevocable Trusts
REVOCABLE TRUSTS
A revocable trusts, as its name suggests, can be revoked or amended by you as creator of the trust (also sometimes referred to as the trust maker, grantor, donor, or settlor of the trust). Most of the revocable trusts that I create for clients have the work “Revocable” in the name of the trust to allow both the client and any other person the client is working with (e.g., another attorney, lender, tax advisor, etc.) to quickly identify the type of trust as being revocable.
However, if the word “revocable” isn’t in the name of your trust, then you’ll have to skim through your trust document for a specific provision about the trust maker (or grantor, donor, settlor) being able to revoke or amend the trust.
What if it doesn’t say in my trust document whether the trust is revocable or irrevocable?
If it doesn’t say, then you’ll need to rely on your state’s statutory law as to whether the presumption is revocable or irrevocable with respect to trusts that are silent on the issue.
For example, in Massachusetts, a trust is presumed to be revocable unless the trust expressly states that it is irrevocable.
New Hampshire has a similar stature that can be found here: 564-B:6-602 Revocation or Amendment of Revocable Trust
But you’ll notice that even if these statutes, there may be an exception depending on when the trust was created (for example, if it was created before that law took effect and if the law is not retroactive), and you’ll also need to be careful to track the governing law of a trust if you created it one state and subsequently moved to another state.
For all these reasons, do yourself a favor and just make sure you state directly in the trust whether you intended it to be revocable or irrevocable?
But what about my realty trust?
Massachusetts has a unique type of trust called a “nominee trust” that is often referred to as a “realty trust” by most people (in fact, when a client comes to me with a realty trust and I tell them it’s a nominee trust, their eyes tend to glaze over so I’ve gotten into the habit of just calling it realty trusts as well when I don’t feel like creating these digressions in conversation).
Nominee trusts in Massachusetts may generally be altered by the “beneficiaries” of the trust, which is unusual if you live in a state that doesn’t have these types of trusts and are used to dealing with a more standard revocable or irrevocable trust structure (because in standard trusts, the common terminology is not for the beneficiary to be able to change the trust, but for the trust maker or grantor to be able to change it).
On a side note: If you have a nominee or realty trust and have misplaced your schedule of beneficiaries then that is a different conversation that I touched upon in another article.
But what if I have a joint trust with my spouse? Can I change or revoke my trust without requiring the consent of my spouse?
This is where things get tricky. When I first started drafting trusts, I used to draft them under the presumption that a revocable trust could not be changed or revoked with the consent of both spouses. However, in practice, this started creating problems both during the lifetime of the spouses and after.
For example, if one spouse is incapacitated (no longer of sound mind because of dementia or Alzheimer’s), then it can create problems if one spouse needs to amend the trust in order to protect their children inheritance (e.g., add in divorce protection provisions for their child who is in a tough spot). If the trust says that both spouses need to sign and one can’t, then you’re generally stuck with that trust - which may not align with the spouses’ original intentions in providing for their children.
Similarly, if one spouse dies, and years go by and the surviving spouse inevitably needs to update the trust again due to family circumstances, then a trust requiring the signature of both spouses also becomes a problem.
For that reason, you need to weigh the pros and cons of whether a trust requires both spouses consent to change or alter it and discuss it with your attorney to fully understand your options.
So does my revocable become irrevocable after I die?
Generally, yes, after a person dies, the trust become irrevocable and at that point in time will need to get a separate tax ID number and can no longer be change. However, as mentioned in the previous section, if this is a joint trust and you expressly gave your spouse the ability to amend the trust after your death (which is becoming increasingly common in the revocable trusts that I draft for clients), then the spouse would still be able to change the trust during his or her lifetime. In that case, only after both spouses are gone, would the trust become irrevocable.
IRREVOCABLE TRUSTS
So if I have an irrevocable trust, does that mean I can’t do anything to it after the trust has been created?
You’re going to hate me, but once again the answer is that it depends. A lot of attorneys draft escape hatches into their irrevocable trusts because they’ve seen so many horror stories over time of clients changing their minds (since we are all humans and are dealing with imperfect information).
What do I mean by an escape hatch.
Well, you could draft an irrevocable trust that allows the beneficiary (for example, an adult child) to be able to withdraw assets from the trust and then put those assets in a new trust.
You may also have something called “trust decanting” provisions in a trust, that similarly allow a trustee to move assets from your current irrevocable trust into a new irrevocable trust so long as the new trust follows some strict guidelines to follow the trust decanting laws in your state.
And then there is something called “trust protectors” which is also an evolving area of law that actually allows a third party (usually an attorney or CPA that is independent and not subordinate to the person appointing him or her) to then amend or change the trust (even that it is irrevocable) in order to make sure the trust maker or grantor’s original intentions are followed.
But, with all the being said, unless you have your attorney review your irrevocable trust, you can presume it is irrevocable in the sense where no changes can be made to the trust after you’ve created it.
Questions? Concerns? If you’d like me to review or create a trust for you and your family, then click the link below to schedule a call today.
