By John C. Clark, Attorney at Law
Change is Inevitable
You set up your revocable living trust because of its flexibility to function as a living document. As we grow older, circumstances change that necessitate corresponding changes in our estate planning. This article briefly and generally explains how to change, or revoke, your living trust.
Traditionally, a trust was presumed to be irrevocable unless the trust declared otherwise. In California, however, the opposite is true. A trust is presumed to be revocable unless the trust expressly states that it is not revocable. A revocable trust means it can be amended/changed. However, it is imperative that you first read the living trust document to determine the specific rights, circumstances, and methods for changing/amending or revoking the living trust.
When is a Living Trust Change Appropriate?
First, decide if a change to your living trust is appropriate. When your life’s circumstances have materially changed, you should consider whether a change to your trust is appropriate.
Appropriate circumstances include, for example:
Amending Joint Trusts
If you have a joint trust with a partner, there are a few change or revocation considerations.
Generally, half of the trust assets can no longer be changed or revoked upon the first partner’s death. Unless the trust states that a surviving partner can change all the assets after the first spouse dies, the surviving spouse can usually only change the trust for their half of the community property and that partner’s separate property assets. The surviving partner may only have limited access to the deceased partner’s half-share of the community property and separate property assets.
Divorce can also impact estate plans and your joint living trust. If you separate or file for divorce, you should immediately revoke your trust to avoid potential hostility from the children or other beneficiaries. Occasionally, death occurs before a final judgment of divorce, and property or assets intended for other beneficiaries may instead pass to the separated partner.
How to Change or Revoke a Living Trust
After deciding to go forward with changing or revoking your living trust, you must determine the method. Start with reading the trust document and consider following the method stated in the trust. If the trust specifies a method for change or revocation, that method must be followed. California law allows a trust to be revoked or changed in writing, other than in a will, signed by the settlor of the trust and delivered to the trustee during the settlor’s lifetime.
For a joint trust change/amendment, both partners must execute the change/amendment while both partners are alive. However, either partner may revoke the trust without the consent of the other partner unless stated otherwise in the trust.
What Else Needs to Change with the Living Trust?
The revocable living trust is just one of several documents included in an estate plan. When deciding to amend your trust, consideration must be given to amending your pour-over will, durable powers of attorney, and advance health care directive.
Don't DIY Your Amended Living Trust
You shouldn’t draft your own amendment to your trust as a cost-saving measure. We have found it is usually more expensive to fix the problem or, in the worst cases, litigate the issues that arise because of improperly prepared trust amendments.
While the above considerations sound simple, and for the most part, are simple, there likely exist unique situations specific to your estate planning documents that may require some legal or financial expertise to accomplish your objective for amending or revoking the trust.
Need Help Amending Your Living Trust?
We strongly advise that you consult with the attorney who drafted your living trust documents to help avoid any legal challenges. Our office is very experienced in fixing living trust documents that were improperly prepared or executed. We often have to go to court to fix living trust documents. Our attorneys are available to discuss amendments or revocations of your trust and determine the best course of action for your specific circumstance.
Rusconi, Foster & Thomas, APC
We're located in Morgan Hill, California serving Santa Clara, San Benito, Santa Cruz, and Monterey Counties since 1956.