3 Reasons To Modify An Irrevocable Trust

Irrevocable trusts in Las Vegas

Did you know that irrevocable trusts can be modified? If you didn’t, you’re not alone. The name lends itself to that very belief. However, the truth is that changes in the law, family, trustees, and finances sometimes frustrate the trust-maker’s original intent. Or, sometimes, an error in the trust document itself is identified. When this happens, it’s wise to consider trust modification, even if that trust is irrevocable. It’s important to know when to modify an irrevocable trust.

 3 Reasons You Should Modify an Irrevocable Trust

Here are three examples of when an irrevocable trust can, and should, be modified or terminated:

1. The Tax Law Changed

Adam created an irrevocable trust in 1980 which held a life insurance policy excluding proceeds from his estate for federal estate tax purposes.  Today, the federal estate tax exemption has significantly increased making the trust unnecessary. 

2. Your Family Circumstances Changed

Barbara created an irrevocable trust for her grandchild, Christine. Now an adult, Christine suffers from a disability and would benefit from government assistance. Barbara’s trust would disqualify Christine from receiving that assistance.

3. An Error Was Discovered 

As part of his estate planning, David Sr. created an irrevocable trust to provide for his numerous children and grandchildren. However, after the trust was created, his son (David Jr.) discovered that his son (David III) had been mistakenly omitted from the document. 

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Are You Sure Your Irrevocable Trust Is Current?

If you’re not sure an irrevocable trust is still a good fit or if you wonder whether you can receive more benefits from a trust, we’ll analyze the trust. Perhaps irrevocable trust modification or termination is a good option. Making that determination simply requires a conversation and a look at the document itself. Please call our office now to schedule a chat. We are here to help you with when to modify an irrevocable trust.

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10 Estate Planning Tips

Life has too many “what-ifs” to be able to plan for every conceivable situation you might encounter. In spite of this, it’s still possible to create an effective estate plan that will not only anticipate your death and/or disability but do so in a way that will enable those you love to focus on your legacy, rather than your estate plan. Check out these 10 estate planning tips!

10 Estate Planning Tips For Creating an Effective Estate Plan

  • Get A Financial Power Of Attorney
    • Give the power of attorney over your financial matters to someone you trust. This person should also have the education or life experience to make sound financial decisions on your behalf, in the event you become incapacitated.
  • Find A Healthcare Power Of Attorney
    • For most of your life, you are far more likely to be temporarily incapacitated or disabled than you are to die. For this reason, a comprehensive estate plan will give the power of attorney to someone for health care decisions. It is a very good idea to give someone the power to act on your behalf in the event you are unable to make decisions for yourself.
  •  Do A Regular Inventory and Correctly Title Your Assets
    • You have spent your whole life, up to this point, working to acquire assets that will support you, and possibly your children after you die. Regularly inventory and carefully title your various assets. Designate beneficiaries for your annuities, insurance policies, and retirement plans. You should bear in mind that anyone whose name appears on the title of an account, policy, or retirement plan will have the authority to access and use the funds on your behalf.
  • Have a Will In Place
    • Have a legal will prepared that properly disposes of your assets. A will can also nominate legal guardians for your children to provide for their care, upbringing, and education in addition to managing their inheritance.
  • Take Advantage of Protections From Creditors
    • Take advantage of protections that are available, as a matter of right, by law to protect certain basic property rights. For example, some assets (e.g., 401(k)s, most IRAs, and your primary residence) are protected by state law; therefore, they can’t be taken by a general creditor to satisfy your obligations.

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Estate Planning Tips Continued…

  • Use Revocable Living Trusts
    • Use trusts to hold assets and settle your estate. A trust is an effective way to avoid the probate process that can be lengthy and needlessly expensive. Most people should eventually use a revocable living trust as the centerpiece of their estate plan.
  • Understand Irrevocable Trusts
    • Instead of leaving inheritances directly for your children, use an irrevocable trust. This can help you avoid claims against the inheritance from debts, divorce, disability, and destructive spending habits. In addition, there are dozens of purposes for irrevocable trusts created for favorable income, estate, and gift tax results and, when used correctly, protection of assets.
  • Seek The Help of Financial Advisors
    • Seek professional advice from attorneys, bankers, financial planners, and insurance brokers as you see fit. It’s never too early to start planning for your financial future. In order to be a good steward of your assets, find a good financial advisor with the help of family and friends, and trusted professionals.
  • Periodically Review and Revise
    • Effective estate planning is a lifelong activity. Tragedy could strike at any time. As we have seen, laws, your family circumstances, and the makeup of your own wealth will change over time. It is critical to review and update your estate plan on a regular basis to ensure that the best possible protections are being utilized.
  • Take Time To Ponder
    • Family dynamics change all of the time and in lots of different ways. Think of charitable causes you are committed to or care about. Charitable giving is one tool an effective estate planner has in the tool belt to reduce or eliminate taxes that the estate, or loved ones, will have to pay when you die. Financial circumstances can change rapidly. Your legacy will reflect the time and thought you have invested in creating and maintaining your estate plan.

Use These 10 Estate Planning Tips To Get Started

An estate plan that is out of date, can be just as harmful as not having one at all. It is essential to maintain your estate plan so your legacy, and not estate planning deficiencies are what will be remembered. If you regularly follow the above ten timeless tips above, your estate plan will remain healthy and effective to accomplish what it was created for.

Contact the attorneys at Williams Starbuck to help you with your Estate Planning needs today!

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