PROBATE CORNER
PROBATE CORNER
Amending An Irrevocable Trust – Let Me Count The Ways
DAVID M . GARTEN
Irrevocable trusts have become increasingly popular for creditor protection , tax benefits and dead-hand control . One tradeoff is that the grantor gives up the power to revoke or amend the trust . Because circumstances and families are constantly in flux , the longer a trust is in existence the greater the chance that it may need to be revised to reflect those changes . Fortunately , it is possible to change the terms of an irrevocable trust . Over the years , different options have developed to allow changes to an irrevocable trust . What follows is a brief description of those options :
STATUTORY MODIFICATION : The following statutes authorize the court to modify an irrevocable trust :
Statute § 736.04113
Title
Judicial modification of irrevocable trust when modification is not inconsistent with settlor ’ s purpose
§ 736.04114 Limited judicial construction of irrevocable trust with federal tax provisions trustee or any qualified beneficiary
Standing
trustee or any qualified beneficiary
trustee or any qualified beneficiary
Statute Title Standing
§ 736.0413 |
Cy pres |
settlor , a trustee , or any qualified beneficiary |
§ 736.0414 Modification or termination of uneconomic trust
§ 736.0416 Modification to achieve settlor ’ s tax objectives trustee
any interested person
STAUTORY REFORMATION : The following statute authorize the court to reform an irrevocable trust :
Statute Title Standing
§ 736.0415 Reformation to correct mistakes settlor or any interested person
SETTLEMENT AGREEMENTS : The following statute authorizes the trustee and all qualified beneficiaries to modify an irrevocable trust :
RESERVATION OF POWERS : The settlor can give one or more individuals the authority to modify the trust (“ trust powers ”). Irrespective of this reservation of trust powers , the provisions contained in § 736.0105 ( 2 )( a ) - ( w ) prevail over any provision or attempted modification of the trust .
POWER OF APPOINTMENT : A power of appointment is a delegation of one ’ s right to dispose of property and is usually exercised through a will or trust . The statutory definition is contained in § 731.201 ( 30 ). If the instrument creating the power sets forth the manner in which the power is to be exercised , the donee must exercise the power in the prescribed manner . Since the donee is not a fiduciary , he / she has limited fiduciary responsibility and potentially no liability to the named beneficiaries of the power . For a more detailed discussion on powers of appointment , refer to my article entitled “ The Decanter Side-Step . A Primer On Powers Of Appointment ”.
( Continued on next page )
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§ 736.04115 Judicial modification of irrevocable trust when modification is in best interests of beneficiaries trustee or any qualified beneficiary
Statute Title Standing
§ 736.0412 Nonjudicial modification of irrevocable trust unanimous agreement of the trustee and all qualified beneficiaries
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