Irrevocable trusts are often far superior to revocable trusts for many reasons, not the least of which is taxes. However, the big drawback to irrevocable trusts is in the name. They are irrevocable. Once the trust is properly executed, it is supposed to be set in stone.
In other words, if circumstances change and you no longer like the terms of the trust, that is too bad. You are stuck with it. This has caused many people to be wary of irrevocable trusts, especially younger people who expect many things in their lives to change.
Is this no longer the case? Do you not need to worry about the permanence of an irrevocable trust? And, if this is true, what is the point of an irrevocable trust?
Irrevocable trusts may no longer be truly irrevocable. In a recent Forbes article, it was reported a total of 25 states now allow old trusts to be decanted. The decanting process entails taking all of the assets from an old trust and putting them in an entirely new trust with different terms. It is technically the trustee who is allowed to do this. It is supposed to be for the benefit of the trust beneficiaries.
Interestingly, the trustee does not need to have permission from a court and often does not even need to inform the beneficiaries. The different states that allow decanting have different rules about what trust terms can be changed in the new trust. Is this an option for you? If you have an old irrevocable trust, it may be time to change the terms, depending on your estate planning goals. At Hougum Law Firm, we know and understand the challenges you face and we want to help you plan ahead to protect yourself and those you love most. Call us at (715) 843-5001 or contact us through our website to schedule an appointment with Attorney Alan Hougum.