How to Revoke an Irrevocable Trust
An irrevocable trust is a complex estate planning document. If you are the grantor, or the person creating and funding the trust, you lose control of any assets placed in the trust. Additionally, you lose the ability to change or revoke the trust. However, there may be some circumstances under which the trust can be revoked or changed. In this article, we will go over four ways to revoke an irrevocable trust. Please note, these may differ from state to state. You also need to take into consideration the provisions set out in your irrevocable trust.
1. Instructions for Dissolution
The first way to revoke an irrevocable trust is highly dependent on your trust agreement. You will want to check if your trust contains instructions for dissolution. If it does, these instructions may allow your trustee to resolve your trust and return the assets to you.
2. Beneficiary Consent
In some cases, all you need to revoke your irrevocable trust is for you beneficiaries to consent and sign a waiver. Your beneficiaries have this power because they are considered the ultimate owners of the trust’s assets. This being said, the process you need to follow will depend on the state you live in. Some states just require the consent of the beneficiaries. Others require beneficiary consent as well as the trustee’s consent. Some require the beneficiaries’ consent and a court order. You will have to look up your state law to find out which situation applies to you.
3. Petition for Dissolution
The third avenue to revoke an irrevocable trust is to petition the court to dissolve it. Typically, for the court to approve this, you will have to provide them with legal grounds to base the revocation on. One of the main reasons for revocation is that the purpose of trust can no longer be accomplished. For example, if the irrevocable trust had a single beneficiary and that person dies, the purpose of the trust would no longer exist.
4. Trust Protector
A trust protector is an independent third party who has the ability to perform certain duties regarding the trust. The powers the trust protector has may be restrictive or expansive. Their exact powers will depend on how your trust document. Typically, they have the power to remove and replace trustees. They may also have the power to alter trust provisions due to unforeseeable circumstances, such as tax law changes. The trust protector may not be able to revoke your trust, but they may have the ability to help you make changes.
Your Irrevocable Trust
If you think one of these four avenues will help you, you will want to double-check your trust documents to make sure it is allowable. The process to revoke an irrevocable trust is very complex and, in some cases, impossible. Because of these, it is very important that you enter into an irrevocable trust contract carefully and fully educated.
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