Divorce, marriage, a new family member, or a change in fortunes can have the biggest impacts on your financial picture. A lot can happen in a year, and we’ve seen firsthand what a mere 365 days can make in the lives of our clientele. Now think about what could happen in five years. Ten years. Twenty! Before you know it, that living trust you put in place is looking pretty dated.
If you’ve moved to a different state, perhaps the laws of inheritance are different, or perhaps your assets have changed altogether. Whatever the reason, you’re probably wondering whether this thing will amend itself or if you’re headed for another trip to see a lawyer.
If you’ve moved to a different state, perhaps the laws of inheritance are different, or perhaps your assets have changed altogether. Whatever the reason, you’re probably wondering whether this thing will amend itself or if you’re headed for another trip to see a lawyer.
Control and efficiency are two things you can’t give up regarding your wealth. After all, you’ve worked hard to get to where you are, and the last thing you want is for another person or entity to say what happens to your wealth.
Fact is, trusts and estates are a complicated world. One wrong word or poorly thought-out clause in your legacy, and you could unwittingly end up creating consequences no one intended.
Unsurprisingly, DIY forms and quick fixes found online can both be tempting. But at Dominion, we tell our clients to avoid such approaches because they could put your wealth at risk. So if you’re thinking about amending your trust without an attorney, hear us out first.
What’s the Point of Amending a Trust?
You need your trust to be as dynamic as the life you lead. That means it needs to be able to adapt to whatever you throw at it. Got a new child on the way? No problem. Planning to get married? Easy fix. Amending a trust is something that periodically needs to be done for almost everyone. Here are some of the most common reasons why people amend trusts:
Family Structure Changes
Marriage or divorce, childbirth or a death in a family. Lots of things can happen that call for amendment. It’s something you need to stay on top of to ensure your asset distribution needs stay intact.
Changes to Financial Standing
Changes to your trust may be required due to a sudden increase or decrease in your wealth, but also if you acquired new property or changed your investment strategy. Any changes to your wealth and assets require your immediate attention.
Relocation
Let’s say you move to another state, but that state’s inheritance laws are different from your previous location. Your trust could become ineffective as a result. Not just that, but it could cause your assets to become exposed to additional taxes.
Outside of major life changes, you also need to make sure you’re reviewing your trust regularly to ensure everything’s in proper order. Laws and tax codes change with time for all kinds of reasons. You might not even share the same financial objectives that you had just a few years ago.
Reviewing your trust often ensures that you don’t let anything slip through the cracks while also making sure it’s still in line with your present goals. If it’s not, it’s time to amend.
Can You Amend It without an Attorney?
The internet has brought forth many novel ideas, like giving you the power to make changes to your trust without the help of an attorney. A quick Google search is all it takes these days to reveal all manner of do-it-yourself tools. For anyone who wants to manage their living trust on their own, this would look like a boon.
Just fill in the blanks and you’re good to go? Well, not so fast. At Dominion, we prefer to base decisions on solid knowledge rather than shortcuts. By the way, it makes perfect sense why you would want to do it yourself. We get it. But most of our clients find that they wished they’d have gone with a professional from the start rather than wasting their time with so-called DIY solutions and putting their wealth at risk.
Why is that, you ask? Given their complex legal nature, any error with trusts can quickly snowball into a nightmare. From dizzying legal components to mistakes, you can put yourself in a world of hurt pretty fast.
We know DIY options are enticing, especially when your perspective comes from one of legal fees. But there’s a price to pay for a poorly amended trust. Beneficiaries can raise disputes, the trust’s validity can be challenged in court, and there can be unintended tax consequences.
Neither of these things is more valuable than professional guidance. And what you pay for such services won’t come anywhere near the cost of an error in your trust. Beyond legal expertise and experience, you’re getting peace of mind that your trust truly reflects your wishes and will stand the test of time.
Leaving this important task to a qualified professional is an investment in your legacy that will save you time, money, and heartache in the long run. And that’s an investment you can’t afford to not make.
How to Amend a Living Trust: Proceed with Caution
While we strongly suggest everyone to get professional legal counsel, we recognize that you might still opt to wing it yourself. If you happen to be in this camp, you can’t afford to proceed in any other way but cautiously. When you’re ready for the amendment process, here’s the route to take:
1. Secure the Proper Forms
Start out with finding a good online source for getting trust amendment forms. Keep in mind that forms will differ by state, so you need to make sure you pick one that corresponds to your jurisdiction. Not all forms are created the same – some may be outdated or lacking important legal provisions.
2. Be Very Clear
Use plain, precise language when filling out the form – avoid “legalese,” and don’t beat around the bush. You want to be understood with unmistakable clarity. Any confusion or misinterpretation will have unintended consequences.
3. Notarization Matters
Once you’ve amended it, you’ll need to get it notarized. It’s another step that gives your trust an added layer of legal validity because your signature serves to both authenticate and verify the document.
4. Attach and Preserve
Attach your amendment to your original trust document. Keep both documents in a place that is both safe and accessible to your trustee or successor trustee. Don’t store this important paperwork in a safe deposit box. During probate, you may not be able to access them.
5. Regular Review
Life can change on a dime, and this is true even after amending a trust. Make a point of conducting periodic reviews of your trust and keeping it in line with your current financial goals and circumstances. If changes have occurred, update your trust to reflect those changes.
Amending a trust without professional advice can be done, but it’s not recommended. There are too many variables in place that can jeopardize your legacy. At Dominion, we believe it’s reckless to make decisions without being properly informed.
We therefore encourage all of you to consult expert legal advice if you find yourself at a loss during the aforementioned amendment process or just want to make sure you’re not leaving anything to chance.
Restating or Revoking a Living Trust
Amendments aren’t the only options you have at your disposal. There are two alternatives you can utilize in the form of restatement and revocation.
Restatement
Restatement simply creates a whole new trust document made with whatever changes you desired. It’s essentially a complete overhaul, a fresh and revised version of the old. This can be a particularly effective approach when you have already made a number of amendments and are left with a mess of a document. Everything is restated into a single, concise document.
Revocation
On the other side of the coin is revocation, where the current trust is effectively canceled. It’s almost like tearing up the old document and starting with a brand new trust that lines up with what you want today. It’s a favored solution when extensive changes to the trust are necessary, or you are looking for a clean break from the prior trust structure.
Whether to amend, restate, or revoke your trust depends on the extent of the changes required, as well as their nature. There are a number of options available here, and an experienced attorney can help you walk through these options to find the best, most effective, option for your particular situation.
Amending an Irrevocable Trust
We’ve seen how revocable trusts can be amended to suit the changing times, but what if you need a trust that’s essentially unchangeable? That’s the position of irrevocable trusts.
Generally difficult to modify, an irrevocable trust can provide added defense to your assets. If changes are needed down the line, all beneficiaries usually have to agree on said changes, or there has to be a valid court order.
Typically, such modifications are allowed only in particular cases, when, for example, the trust purpose is undermined or it becomes necessary to change the trust in connection with altered tax or inheritance laws.
Which Solution Best Fits Your Finances?
Life is full of changes, and you need to be sure you’ve got a trust that works for your financial future rather than against. You can ensure you’re making the right call with Dominion.
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