During the course of your estate planning, setting up a living trust (or two) may be an integral part of your overall plan. It’s a relatively safe, easy way to cover asset distribution without the time and expense of probate court for your family and beneficiaries. Plus, you keep your property while you’re here, if you want to. Once it’s in place, it’s set. But what if some parts of your life suddenly change after you’ve created and initiated everything? Is there ever a reason to amend your living trust?
When You Need To Update Your Living Trust
Since a living trust functions differently than a will, it’s also easier to change or amend it. Also known as “revocable trusts,” they’re created during your lifetime, and become irrevocable at the time of death. So why change anything?
Life changes, sometimes without warning, and a trust can be changed right along with it. Regularly review your entire estate plan for updates, but especially if you’ve had any major life changes, such as:
- Marriage, death or divorce
- A new child, i.e., adoption, birth, or other children who become dependents (i.e., grandchildren)
- Addition or removal of a beneficiary (i.e., death of a beneficiary)
- Adding or updating trustees, including successor trustee
- The property in the trust, including adding new property
- Updating property distribution
- You’ve moved to another state where the laws regarding wills, trusts and inheritance are different, and your trust must adhere to the new state’s laws
Different Than A Will
Because a trust is administered differently than a will, the property is distributed immediately upon death without a probate process. Since the time frame for asset distribution is different, it’s important to make these updates as soon as possible.
For instance, if your spouse is a beneficiary, but unexpectedly dies before you do, you’ll need to replace him or her in the trust.
Another scenario: if a married beneficiary (i.e., your child) decides to file for divorce, it’s important to ensure that the beneficiary will receive his or her part of the trust, and not the beneficiary and their spouse, if that’s your intention.
Regularly review of your estate plan for needed updates ensures that everything is current, and your wishes are carried out as you intended.
As we mentioned in a previous blog post, it is possible for someone to contest a living trust. If you believe there is a possibility that your living trust might be contested, discuss with your attorney the option of adding a “no-contest” clause so that a beneficiary could lose their rights to the trust if they decide to contest.
There are three ways to amend your living trust.
- Trust Amendment—this is an ancillary document that details the changes you’d like to make to your trust, without revoking it entirely. However, if you make continuous changes to your trust, it could make things a bit more difficult for your successor trustee.
- Trust Restatement—this document simply states that you’re not revoking your trust, but just restating it with some amendments. Everything stays in place, there are just a few changes.
- Trust Revocation—a more radical method than the first two, this would involve signing a revocation of the original trust. All property and assets revert back to you. You’ll have to start over with a new trust to transfer property and assets into, unless your intent is to dissolve the trust completely and keep the property. Since it’s a revocable trust, you have the right and the option to do that. Revocation is best for making broad changes to the original trust and starting over.
Your estate planning attorney can help you with these changes, and advise you on which option is the best for your situation.
For more information on a living trust, the Illinois State Bar Association offers some basic information on its website.
Chicago’s Attorney For Living Trusts
If you’re considering a living trust to begin distributing a lifetime of assets, it’s important to work with an estate planning attorney who understands them. James C. Provenza is an Illinois estate planning attorney with years of experience helping clients with their estate planning to make sure their wishes are carried out. Call our firm today at (847) 729-3939, or use our online contact form.