How do I change a living trust?

A living trust is a trust established during the life of a person. All assets are deposited into the trust and removed from the possession of the original owner. This allows the owner to avoid probate upon his death, ensuring greater privacy for him and his family. One of the advantages of a revocable living trust is the right to change any of the trust terms during your life. There are four typical changes that can be made to a trust.

Amendments to Your Living Trust

Amendments are for minor changes to a trust. For instance, if you wrote down the wrong birthday of a beneficiary, this change would be corrected in an amendment. Amendments are separate from a trust. This means that an amendment must be signed by the trustee, two witnesses, and notarized. The document is then attached to the original trust document. If there is more than one trustee on the original trust, the amendment can only be made with the approval of every trustee.

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Restatements for Larger Living Trust Changes

If there are any large changes to be made to the trust, a restatement is in order. A restatement is an updated, fresh trust document. Restatements can be used for changing trustees, adding or removing assets, updating asset portfolio changes, or changing beneficiaries. This new trust document should also include a provision rendering the old trust document void. This ensures there is no confusion later when the trustees begin receiving payments. Because a restatement is a new document, it must be resigned by all trustees, two witnesses, and a notary.

Supplemental Instructions for the Trustee of Your Living Trust

If you are planning on resigning as trustee in the immediate future, you may wish to draft a supplemental instruction document for the next trustee. In this document, assets may require re-labeling and specific instructions regarding each beneficiary may be in order. This document is not part of the actual trust, but should be included in the trust portfolio papers to make the transition easier. It is always best to sign, date, and notarize this document to establish its accuracy.

Execute Power of Attorney

If you have reached a point where incapacity will make it impractical for you to care for your own trust, then it is time to execute a power of attorney document. A power of attorney is added to the trust as a set of instructions for your financial and medical care during the duration of your life. This document gives the new trustee the power to pay your medical bills, make continued investment decisions, and sign any medical consent forms on your behalf. A power of attorney must be signed, dated, signed by two witnesses, and notarized to be valid. Some states may also require that the witnesses are sworn.

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Drafting Living Trust Documents

Trust documents are complex legal documents. Articles such as powers of attorney require precise wording to ensure complete authority is given to the trustee. If you need to change your living trust, contact your estate planning attorney for a consultation to ensure that the document is accurately drafted.

Case Studies: Changing a Living Trust

Case Study 1: Amendments to Your Living Trust

John Smith created a living trust to protect his assets and provide for his beneficiaries. However, he recently discovered an error in the trust document, where he mistakenly wrote down the wrong birthday of one of the beneficiaries. To correct this minor mistake, John needs to execute an amendment to the trust.

The amendment must be signed by John as the trustee, two witnesses, and notarized. It will then be attached to the original trust document. If there are multiple trustees, their unanimous approval is necessary for the amendment.

Case Study 2: Restatements for Larger Living Trust Changes

Sarah Thompson has a revocable living trust and wants to make significant changes, including changing the trustee, updating asset portfolio changes, and modifying beneficiaries. In this case, a restatement is appropriate. A restatement involves creating a new trust document that supersedes the original one.

Sarah and all trustees must sign the restatement, along with two witnesses and a notary. This ensures clarity and avoids confusion regarding the trust terms and payment distribution.

Case Study 3: Supplemental Instructions for the Trustee of Your Living Trust

Mary Johnson, the current trustee of her living trust, plans to resign due to personal reasons. Before stepping down, she wants to provide the next trustee with detailed instructions regarding asset re-labeling and specific beneficiary requirements.

Mary decides to draft a supplemental instruction document, which will not be part of the trust itself but included in the trust portfolio papers. She signs, dates, and notarizes this document to establish its accuracy and facilitate a smooth transition.

Case Study 4: Execute Power of Attorney

James Anderson, the trust owner, anticipates a future where he may become incapacitated and unable to manage his own trust. To ensure his financial and medical affairs are taken care of, James executes a power of attorney document.

This document grants the new trustee the authority to handle medical bills, investment decisions, and sign medical consent forms on his behalf. James signs the document, along with two witnesses, and has it notarized to make it legally valid.

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