03 May 2012

Amending Your Revocable Living Trust

Many people choose to have a revocable living trust as the center point of their estate plan.  The revocable living trust contains instructions about how to manage your assets during your lifetime, after your death, and after the death of your spouse or significant other, if applicable. By choosing a revocable living trust as part of your estate plan, you have wisely chosen to avoid the probate court during your lifetime (i.e., a conservatorship proceeding) and at death. This is because assets held in a revocable living trust avoid the need for probate administration under California law.

What if the terms of your revocable living trust, as they were written three, five or ten years ago, no longer fit with your family, the size of your estate or other issues affecting your life? If this is the case, you can simply amend the trust. The revocable living trust is a flexible instrument and allows you to amend it as often as you want to meet your personal and financial goals.

During your lifetime, you can amend the trust unilaterally with respect to your assets and you may jointly amend the trust with your spouse with respect to your marital assets, if it is a trust jointly created by you and your spouse. Typically, a revocable living trust may not be amended by anyone following your death with respect to your assets. For example, if a husband and wife create a joint revocable living trust and the husband dies, the husband’s portion of the trust (the portion of the trust that holds his assets) becomes irrevocable while the wife’s portion of the trust (the portion of the trust that holds her assets) remains revocable. This means that after the husband’s death, the wife may amend the terms of her portion of the trust, but not the terms of the husband’s portion of the trust. Upon the wife’s subsequent death, the entire trust becomes irrevocable and no one may amend it.

If you become incapacitated during your lifetime, you may not amend your trust (if it is a single settlor trust) or your portion of the trust (if it is a joint settlor trust) unless you have previously authorized an agent under a durable power of attorney to amend your trust on your behalf (and your trust allows the agent to make the amendment) or unless a conservator of the estate is appointed by a court to act on your behalf and the court authorizes the trust amendment. It is important if you want maximum flexibility with your estate plan to authorize the agent under a durable power of attorney to amend your trust while you are incapacitated with a corresponding provision in your trust allowing the agent to take this action. However, keep in mind that the agent will have the authority to change the distribution provision in your trust that you may not have agreed to if you had capacity to change the trust yourself.  This issue should be carefully reviewed by you and your estate planning attorney. If you do not have an estate planning attorney, please do not hesitate to contact the attorneys at Drucker Law Offices who will advise you regarding this and other pertinent estate planning issues.

If you would like to discuss this or other trusts and estates issues, please contact the attorneys at Drucker Law Offices, 468 North Camden Drive, 2nd Floor, Beverly Hills, CA 90210, 310.285.5375 Tel, 310.444.9754 Fax, www.druckerlaw.com

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