No matter how much time you spend creating your trust as part of your estate plan, there may come a time when you need to make some changes. If your estate plan doesn't have a standalone trust (or you created a testamentary trust in your will), then you can easily update your will. If you've created an estate plan with a trust, hopefully, when you spent the time to create your trust, you took the “long” view and worked with your professional advisors on a long-term plan. Once it's set up, you took the time to properly transfer your assets to the trust (if the assets are real estate and bank accounts, there can be significant paperwork to retitle the asset into the trust’s name). After going through all of that work to create and fund your trust,
What do you do when you want to make a change?
I remember a few years ago, I was between sets on the tennis court this weekend when my partner and I randomly started discussing amending a trust. He and his wife had set up a trust and placed their cabin in the trust along with some other vacant property. At the time they set up the trust, their children were underage and they appointed his brother as the successor trustee. But now, the children are grown, they love spending their summers at the cabin, and his brother is a bit older and doesn’t live nearby anymore. My tennis partner had spent the week looking at websites to try and find an answer, but then apparently he remembered that he plays tennis with an attorney each weekend (and apparently maneuvered to make sure he was my partner for tennis). After all his research, he decided trust amendments weren’t something he wanted to try to do himself.
What Is A Trust Amendment?
It's a pretty common scenario and rather than create a whole new trust, my friend needed a trust amendment for his Minnesota estate plan. The amendment is a separate legal document that changes specific portions of your trust. It leaves the rest of the trust unchanged. This is different from a restatement, which is used to replace and supersede all of the provisions of your trust. There’s no set rule for when an amendment is used instead of a restatement, but generally, an amendment is used for small changes, such as
- Changing successor trustees
- Updating someone’s name (they got married or divorced)
- Adding or deleting specific bequests
Most people only need to amend their trust occasionally. However, over time, these amendments can add up. I usually tell my clients that if it takes you more than one hand to count your amendments, it may be time to restate your trust to make sure you have one coherent document for your trustees to work with.
When Should I Use A Restatement?
When you are making significant changes to a trust, a restatement is often a better option. There can be many different major changes, but some examples are
- Removing a beneficiary from the trust
- Adding a new spouse as beneficiary
- Changing distributions for charitable reasons
Whether you are considering an amendment or a restatement, it’s a good idea to consult with an attorney who can help parse out the issues for you. You may feel like you spent too much time and money on your trust when you first had it created, but don't let that stop you from at least having an attorney review your proposed changes and give you advice on which path to choose. The process may not be as expensive or intimidating as you think it is.
If you are interested in amending or restating your trust, or if you need a trust drafted, let's set up a Legal Strategy Session and we can review the best options for you and your family.