Revocable living trusts are essential estate planning tools that can be changed at any time by the trustmaker while they are still alive and competent. Two common ways of modifying a revocable living trust are through an amendment or a restatement. In this blog post, we will explore the differences between the two and when each should be considered.
First, let's review the basics of revocable living trusts. A trustee oversees the management of property transferred into the trust at the direction of the trustmaker for the benefit of the trust's beneficiaries. Trustmakers who are still alive act as their own trustees. When a trustee dies, a new trustee takes over as the successor trustee. Unlike an irrevocable living trust, which cannot be modified or revoked, a revocable living trust can be changed at any time.
An amendment to a revocable living trust involves making specific changes to the trust's provisions, while the other provisions remain the same. On the other hand, a restatement of a trust replaces and supersedes all the provisions of the original trust. A restatement is also known as an amendment and restatement.
If the changes to the trust are minimal, such as adding or deleting specific bequests, changing who will serve as the successor trustee, or updating a beneficiary's or the successor trustee's legal name due to marriage or divorce, then a simple trust amendment will suffice. However, if the trustmaker wants to make significant changes, such as adding a new spouse as a beneficiary, completely cutting out a beneficiary, or changing from distributions to family members to distributions to a charity (or vice versa), a complete restatement should be considered.
If you have made three or four simple trust amendments over the years, you should consider consolidating them into a complete restatement. Having one document to follow will make it easier for your successor trustee.
It's important to note that if your state's laws regarding revocable living trusts have changed, you should restate your living trust document to comply with the new laws.
If you're considering making changes to your revocable living trust, consult with your estate planning attorney. Handwritten changes to the trust agreement may void or ignore the trust agreement if they are not signed with the same formalities as the original trust agreement. To ensure that the trust amendment is legally valid and binding on all your beneficiaries, ask your estate planning attorney to prepare it for you.
Whether the trust is amended or restated, the original name and date will remain intact. The time and effort that you put into funding your revocable living trust under the original trust name and date will not need to be redone.
In conclusion, a revocable living trust is a powerful estate planning tool that can be modified through an amendment or restatement. To determine which option is right for you, consider the magnitude of the changes you wish to make, and consult with your estate planning attorney. Remember to always speak to an attorney first.