Forming a trust creates an entity where the property is held for the benefit of someone else. 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 might conceivably last for decades, so when a trust needs to be changed, the process depends heavily on the type of trust that the grantor created. Schedule an appointment with a trusts and estates 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 is free to change its terms at any time prior to death.
So long as the trust grantor is alive, he or she could decide to modify or terminate his or her revocable 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 could petition the court to alter the trust if there has been a change in circumstances affecting the trust and if 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 the principal and income of a trust in a way that is 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 that power. 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 create a mutual, non-judicial agreement that modifies some of the terms of a trust.
A virtual agreement cannot change the dispositive terms of the trust but may be able to facilitate a change in trustee or beneficiaries or a change to 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 and revised frequently to reflect your current wishes, and keeping your trust up-to-date ensures that there is no confusion as to 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.