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Our last video discussed how to modify a revocable living trust. Today, I’m going to cover a few ways that you might be able to modify a trust that is irrevocable. Perhaps, you need to make a distribution to a certain beneficiary, but it is not permitted; or perhaps, you would like to change the corporate trustee to an individual trustee. There are numerous other reasons you may want to modify the irrevocable trust. If you believe you would like to do so and you believe you have a good reason for doing so, you should meet with a lawyer who practices in this area right away.
First, you will want to review the trust document with your lawyer to find out if the trust itself allows for such a modification and in what circumstances. If not, there are a few other options to consider.
If the settlor and all beneficiaries consent to the modification, they can likely compel a modification; or if all beneficiaries consent to the modification, they can likely comply the modification by petitioning the court.
If the settlor and only some of the beneficiaries consent to the modification, they may be able to compel a modification upon petition to a court and a showing that the non-consenting beneficiaries will not be substantially impaired by the modification.
In some cases, a trustee or beneficiary may want to petition a court to modify or terminate a trust because of changed circumstances. If the changed circumstances were not known or anticipated by the settlor and frustrate a material purpose of the trust, the trust modification or termination may be necessary.
Remember, that it is possible that some of these changes may have an unexpected or unanticipated tax consequence, so it is important to meet with an attorney who is familiar with the relevant tax laws.
Contact our offices if you would like more information.
Disclaimer: The tips and materials provided on this page are for informational purposes only, offered as public service. No information on this website should be considered legal advice or used as a substitute for legal advice. For legal advice, you should contact an attorney directly.
Mendes Weed, LLP offices are located in Walnut Creek and our skilled attorneys provide family, tax, business and trust law assistance for clients. For your convenience, we also have attorneys' offices in San Francisco and Sacramento by appointment only.
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