The basics of irrevocable trusts

     An irrevocable trust is created when a settlor (person who makes the trust) transfers all ownership and control of the assets in a trust. The terms of the trust cannot be modified after it has been created. Assets in an irrevocable trust are not considered parts of the settlor’s estate unlike a revocable trust. This means that the assets can no longer be taxed or used to satisfy the debts of the settlor. These trusts are established upon the settlers death and also known as testamentary trusts as they are made to the terms of their will. 

Modifying or dissolving an irrevocable trust

     An irrevocable trust is not completely irrevocable. In some cases they can be modified or changed, it just has to be done unilaterally. Common mechanisms for changing a trust include consent and judicial modification. 

Modification by consent

     Modification by consent occurs when all the parties associated with the r=trust agree to change or revoke the trust. This requires unanimous consent, even those who only have a small chance of receiving something from the trust. This option is not available if the settlor is deceased, since they can no longer consent to changes. 

Judicial modification

     A trust can also be modified by the courts. Most courts will comply as long as the reason for modification is consistent with the wishes of the settlor. Some scenarios that justify modification are:

• The purpose of the trust has been fulfilled
• A material Purpose in the trust no longer exists.
• The purposes of the trust have become incapable of being filled.
• Compliance with the terms would hurt the purpose of the trust. 

The court determines how the trust can be modified based on the circumstances. This will factor in all evidence or any relevant issues when it comes to changing the trust.

     The best way to protect yourself and your loved ones is to contact your local elder law attorney. They will help you set up a plan to best fit your needs and wishes.