Terminate or Change a Trust

When ownership of certain assets is transferred to a trustee, such as a revokable living trust to a living trust trustee, a trust has been created. The assets, which are to be left to the selected beneficiaries, are managed by the designated trustee. A testamentary trust and a living trust are the two most common types of trusts. Living trusts are created while the individual is still living and the trust may have the option to control the income it creates. Testamentary trusts are not enacted until the grantor has died.

The reason for this is that a testamentary trust is a part of a person’s will. Irrevocable trust and revocable trust are the two categories that living trusts can be broken into. Alteration or cancellation of an irrevocable living trust is impossible, unless there is a consensus between the grantor and the beneficiaries that it is necessary. On the other hand, a grantor can freely change or cancel a living revocable trust at any time he or she wants to.

When to Modify or Terminate a Trust

The modification or termination of a trust can make sense in certain situations.

• Perhaps you want to change who the secondary beneficiary is.
• Maybe one of your beneficiaries has come into a significant amount of money and you want to change the percentages.
• What if you have significantly less assets than you did 20 years ago when the trust was created?
• What if you have if you have significantly more assets than you did when this trust was drawn up?
• Maybe you had a fight with one of your beneficiaries and now you want their portion to go to an academic institution instead.

These are only a sampling of the many questions or situations that might cause a person to want to modify or terminate a trust.

Revocable Living Trusts

As previously discussed, the grantor has the ability to change or cancel a revocable living trust at any time and for any reason he or she deems appropriate.  Unlike irrevocable living trusts, revocable living trusts do not require the beneficiaries’ consent before any changes or termination occur.

Irrevocable Living Trusts

Only if the grantor has the consent of the beneficiaries can an irrevocable living trust be changed or terminated. Without both parties agreeing on this matter, the grantor’s efforts will prove to be futile. 

Testamentary Trusts

While testamentary trusts are indeed irrevocable, they are a part of your will. Therefore, you can amend this trust in any way you see fit, within your will.

Obtaining Legal Help

Recruiting a highly qualified lawyer to help you set up a trust can be a wise move. Attorneys that specialize in this field can offer solid advice on how you should proceed when picking or changing a trust. They can point out all of the benefits and pitfalls that come with each one.