Changes to the tax law or other events that happen during a person’s life may cause estate planning problems. For instance, a trust may become obsolete because of a change to the tax code or because it fails to provide for a newborn child. If an irrevocable trust does become outdated for any reason, it may be possible to change with permission from a judge or from the trust’s beneficiaries.
A judge may allow an irrevocable trust to be modified if not doing so wouldn’t allow it to fulfill its purpose. In some cases, an individual can decant an existing irrevocable trust by pouring assets into a new trust with different language. Other potential ways to modify an irrevocable trust is to appoint a trust protector or to insert language saying that it must comply with changes to tax law. If an individual does want to go through the decanting process, it is a good idea to review state law before doing so.
This is because it may be necessary to notify beneficiaries before doing so, and doing so may conflict with a grantor’s wish to keep a beneficiary in the dark about what he or she stands to inherit. Trusts may also be ended prematurely if it is no longer economically feasible to have it in place.
Creating a trust may make it easier to protect assets and ensure that a person is taken care of if he or she becomes incapacitated. Ideally, an individual will make sure to review a trust and other estate planning documents on a regular basis with the help of an attorney. This may help to prevent them from becoming obsolete as events occur. Updating estate plan documents might provide family infighting or other legal proceedings after an individual passes.