Forming a trust creates an entity in which property is held for the benefit of another person. Trusts have a wide variety of purposes and could be used to provide benefits to adults, children, pets, corporations, or charities after the grantor’s passing.
Importantly, trusts can last for decades, so when a trust needs to be changed, the process depends heavily on the type of trust the grantor created. Schedule an appointment with a knowledgeable trusts attorney to learn more about Lombard trust modification and termination.
A revocable living trust is created by a grantor to manage his or her property during his or her lifetime and pass that property onto the grantor’s beneficiaries after death. One of the major benefits of a revocable living trust is that the grantor can change its terms at any time before death.
So long as the trust grantor is alive, he or she can modify or terminate a Lombard trust. Usually, this is done through an amendment to the trust rather than by re-drafting the entire document.
As its name suggests, it is more difficult to modify or terminate an irrevocable trust in Lombard. These estate planning devices are not meant to be changed, and a grantor generally cannot modify or revoke the trust once it becomes active.
Irrevocable trusts are generally created with a certain goal in mind. When the purpose or goal of a trust is frustrated, a judge may agree to modify it to be closer in line with the grantor’s intentions. Additionally, either the trustee or the beneficiaries may petition the court to alter the trust if circumstances affecting the trust have changed and the beneficiaries agree. They could also ask for a modification if the change is in line with the grantor’s original intentions
A trustee may also be able to modify the way that he or she distributes a trust’s assets. Illinois’ Principal and Income Act allows a trustee to adjust or allocate a trust’s principal and income in a manner beneficial to the beneficiaries.
While the grantor cannot retain the power to modify a trust after it is active, the grantor may assign another person. This person, known as a trust protector, may be able to modify, alter, or terminate the trust as needed.
If the beneficiaries of a trust want to avoid going to court and litigating a change to the trust documents, they may be able to take advantage of Illinois’ virtual representation statute. This law allows beneficiaries and trustees in Lombard to enter into a mutual, non-judicial agreement that modifies certain terms of a trust.
A virtual agreement cannot change the dispositive terms of the trust, but may facilitate a change in the trustee or beneficiaries, or in how the trust is interpreted. The trustee and the primary beneficiaries would be bound by the agreement the same way as they would be if a court ordered it.
One of the most important parts of an estate plan is making sure that the people you want to inherit assets receive the property you intend for them to have. Revocable living trusts should be updated frequently to reflect your current wishes, and keeping your trust up to date ensures there is no confusion about your wishes.
Conversely, modifying an irrevocable trust could be much more difficult. If you need help with Lombard trust modification and termination, schedule an appointment with a trusts and estates attorney today.
