An irrevocable trust is not meant to be changed. However, this does not mean that it cannot ever be altered. While there are substantial limitations on modifying irrevocable trusts, modification can and does happen under the appropriate circumstances. In fact, New York is more flexible than many other states when it comes to allowing an irrevocable trust to be altered.
If you have an irrevocable trust and you want to make a change to it, you should contact an experienced attorney who knows New York trust law and who can help you to explore the possibility of making a modification.
Mark S. Eghrari & Associates PLLC understands the ins-and-outs of laws related to irrevocable trusts and we will carefully review your situation in order to determine if a modification must be made. Give us a call today to find out more.
When Can You Change an Irrevocable Trust?
According to New York Estates, Powers & Trusts Article 7, a grantor can terminate an irrevocable trust if the grantor is able to obtain the consent of all of the parties who have a “beneficial interest,” in the trust. The trust beneficiaries generally must give their OK to the termination of the trust document before it is possible for the trust to be terminated.
The consent of any beneficiaries who are not yet born is not required. The consent of beneficiaries cannot be obtained if those beneficiaries are living and identifiable individuals who are not actually capable of giving consent. Examples would be someone who is mentally disabled and who cannot give consent, or someone who is under age 18 and thus not a legal adult able to give consent. While these beneficiaries cannot acquiesce to the trust termination, a termination of an irrevocable trust may still be possible as long as the trust creator (the grantor) is able to prove that ending the trust would be favorable to a beneficiary who cannot consent.
Modifications are also allowed, as well as terminations. A modification is permitted with the consent of the beneficiaries or if it can be proved a modification is favorable to their interests. Another approach which is sometimes possible, even without the consent of the beneficiaries, is to transfer the principal balance of the trust into a new trust that could have different terms. This is called decanting and is considered a back door approach to a modification of an irrevocable trust.
There are a few restrictions on modification of an irrevocable trust using decanting. For example, the fixed income interest of any beneficiaries who are receiving income must not be reduced by the transfer of assets into a new and different trust, and the change must be in favor of the trust beneficiaries. The change must also not diminish the liability of the trustee for any failures on the part of the trustee and must not increase the commission of the trustee.
By allowing such flexibility for changing the terms of irrevocable trusts, New York sets apart from other states which make modification of irrevocable trusts much more limited. An experienced attorney can discuss with you what your options are if you wish to modify an irrevocable trust.
Why Should You Get Legal Help Modifying an Irrevocable Trust?
If you believe that an irrevocable trust should be modified, you should consult with an experienced attorney to find out if modification is appropriate. An irrevocable trust is usually created for important purposes, like avoiding estate tax or shielding your assets in case you must go into a facility for nursing home care. If you modify your irrevocable trust, you could lose some or all of the benefits associated with creating a trust.
An irrevocable trust attorney can also help you to determine if modification is possible under the circumstances. If so, we will guide you through the trust modification process. We can help you to follow the right steps to get your trust modified so you are able to make sure the trust assets are treated in an appropriate manner.
Getting Help from A Suffolk County Irrevocable Trusts Lawyer
Mark S. Eghrari & Associates PLLC can provide assistance in creating an irrevocable trust as a part of your comprehensive estate plan. To find out more about different types of trusts and about the role of trusts in estate planning, join us for a free seminar. You can also give us a call at (631) 265-0599 or contact us online to speak with an experienced Suffolk County trusts lawyer for assistance in creating a trust that makes sense for your needs. Call now to find out more about how we can help.