For many families, a trust is the number one option to ensure that family assets and inheritances are distributed and managed well. It ensures that all assets are distributed according to the wishes of the trustor, and reduce estate taxes. Many people do not know that there are different types of trusts available, and one of the most common is an irrevocable trust.
In essence, this is a trust that cannot be changed or altered. Some consider it unfavorable to their interests, but an irrevocable trust has numerous tax advantages and can be the best option. But if you are one of the many who wants to change an irrevocable trust, an estate litigation lawyer in Vancouver, British Columbia explained the exceptions where you can alter an irrevocable trust.
Trust Protector Modification
Most irrevocable trusts incorporate a trust protector (an independent third party chosen by the court) and a trust agreement which outlines the limits and terms of the agreement. The trust protector, trust beneficiaries or trustee will examine the circumstances you want to change. If the trust protector supports the change of the trust after scrutiny, then the necessary documents are signed to make an amendment or request the court’s approval for one.
The trustees and beneficiaries could also petition the court to modify or terminate a trust if circumstances have changed which has made the trust outdated and expensive to maintain.
Exercising a Power Of Appointment
Some trust beneficiaries hold lifelong power of appointment, but leave little for future beneficiaries. The power of appointment (POA) gives the trustees the right to specify the division of assets, the beneficiaries of the assets, and who has the right to hold the assets or properties. These terms can be modified to accommodate future or current recipients. This modification requires the signing of a document in the exercise of the power of appointment by the trust’s beneficiaries.
Disposition of Trust Property
The sale of property held in a trust will not change its provisions. It will, however, leave the trust as an empty entity though it continues to exist. In some cases, the sale of the property indicates the termination of the trust. If the trust is linked to the payment of premiums to irrevocable life insurance, and then the payment stops, then the trust becomes empty and eventually lapses.
There are many other ways you can change an irrevocable trust, but you do need an estate lawyer’s help so you could alter it and send the right documents to court. Whether you are a trustee, beneficiary, or trustor, it’s best to review the trust agreement information, so you know the laws and provisions which cover the trust. You could then meet an estate planner so you would know the possible changes and limitations you could face in a few years, and whether you can do any of the previous methods.
As a trustee or beneficiary, you do not need to contend with a trust’s unfavorable terms because it is irrevocable. Even if the above circumstances do not apply to your trust, ask a lawyer so they can review it and help you.