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One of the most popular tools used in estate planning is a trust. These come in the form of revocable and irrevocable living trusts. One of the most common questions people ask is can a revocable trust be changed, and the answer is yes. The creator can easily modify the terms of the agreement when they deem it necessary. However, this answer isn't the same for the question of can an irrevocable trust be changed. An irrevocable one requires a lengthy legal process for modification that isn't easy.
An irrevocable trust is typically created with the intent of asset protection and the reduction of federal estate taxes. With this type of estate planning tool, the grantor, also known as the creator, can designate specific assets to be transferred over to their named beneficiaries.
The main benefit of an irrevocable trust is that they can avoid probate and keep all the grantor's information private from the public. In general, irrevocable trusts are set up with the intent of being permanent without the need for any flexibility. However, life situations may arise that can make it necessary to alter or completely terminate the agreement.
There are various reasons that you may want to petition to modify or terminate an irrevocable trust. One of the most common reasons is to add or remove an asset from the trust. Some other common reasons include updating beneficiaries, changing trustees, and simply terminating the agreement in general. Unlike a revocable trust, you have to go through various legal procedures to attempt to modify or completely terminate an irrevocable one.
After doing a little reading online about how to alter an irrevocable trust, you may have come across the Uniform Trust Code. This particular code has established specific provisions that can be made if all parties consent to them. However, it's important to note that California has not yet accepted the Uniform Trust Code. Therefore, these uniform provisions don't apply to irrevocable trusts in the state of California.
California does have several different statutes that address the California probate code and can allow you to modify or terminate an irrevocable trust.
The first statute is probate code §15404(a). This allows the creator and all heirs to modify or terminate any irrevocable trust if all written consent is given. This is by far one of the easiest ways to modify your irrevocable trust in the state of California.
In the event that not all parties of the trust can provide their written consent, probate code §15404(b) can allow all the parties consenting to petition the court to modify your termination of the trust. However, for this to work, the modification for termination must not substantially impair the interest of any of the beneficiaries who are not giving written consent.
If you're part of an irrevocable trust that needs to be modified or terminated, it's in your best interest to hire an attorney to do the job. They will have first-hand knowledge of the California laws surrounding irrevocable trusts and ensure that you're filing the proper paperwork to petition the courts for the modification or termination process.
Call (800) 662-0882 and speak to an estate-planning attorney at Citadel Law Corporation today. You can expect professional legal advice, and a prompt response to all of your queries.
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