What is a revocable living trust?
A revocable living trust is a legal document that determines how your assets will be handled after your passing. These assets can include investments, real estate, bank accounts, and other valuable possessions. This trust will be created while you are alive. The assets that are placed in the trust will be transferred to the beneficiary you designate after you pass. A revocable living trust can be changed or canceled at any time.
What is an irrevocable trust?
An irrevocable trust requires the grantor to legally remove all of their rights of ownership to the assets they place in the trust once they have transferred ownership. An irrevocable trust is a legal document created where the terms cannot be modified, amended, or terminated without the grantor’s named beneficiary’s permission.
When can a trust be modified?
Revocable living trusts: A revocable living trust can be modified or amended as long as the grantor is alive and retains the capacity to amend or change the trust.
Irrevocable trust: Irrevocable trusts can be modified where the trustee can choose to terminate the irrevocable living trust if the trust has assets equalling less than $100,000. A trustee can terminate an irrevocable trust without the court order when the trust has become unlawful, contrary to the public policy, or impossible to achieve.
Further circumstances that will allow a trust to be modified or terminated including the following:
- When there is clear evidence of a mistake in the trust, the court can modify the trust.
- The court can also modify the trust to enhance the material purpose if the situation arises that may not have been anticipated when the trust was drafted.
- When all of the trustees and beneficiaries agree to terminate or modify the trust to the extent that the modification or termination does not interfere with the settlor’s original material purpose of the trust, the court can modify the trust.
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