When to change your living trust

Most lawyers and financial advisers suggest that when it comes to estate planning, you should review your estate plan every three to five years. After all, things change, which means you should review your will and any living trusts to ensure that they include everything you want them to include. It's also advisable to review them regularly to make sure they're current.

Changing a living trust is not as difficult as it sounds, but it does take some preparation. What looked like a good idea yesterday may not be what you need if certain circumstances have changed.

When should you amend a living trust?

Living trusts sometimes referred to as revocable trusts, can be changed at any time. It is a good idea to review and change your living trust when you've had a significant change in your life. These major changes could include:

• Marriage
• Divorce
• Birth or adoption of a child
• Death of a beneficiary
• Your desire to change:
  • A beneficiary, or to add a beneficiary
  • The trustee or successor trustee
  • The way the property is distributed
  • Which property is part of the trust
  • Your name
• Having moved to another state where the inheritance laws are different

This list is not exhaustive. There could be many other situations that will warrant changing your living revocable trust. If you are not sure whether your situation warrants a living trust amendment, discuss your situation with a trusts and estates attorney.

Why significant life changes require a review of your trust

Significant life changes, such as those listed above, may not require you to change your revocable living trust. They should, however, raise a red flag for you to review the trust to see how it relates to your new situation.

For example, if you are recently divorced and your former spouse is still a beneficiary of your living trust, the former spouse might be able to inherit your property if he or she outlives you. You should change your living trust immediately so that your former spouse is no longer a beneficiary.

How do you amend or revoke a living trust?

Revoking or amending a revocable living trust can be done with or without an attorney. You can amend a living trust without having to go to court. 

If you created the document through an online service, you should be able to amend it through them for a small fee. Some services might even amend it for no fee at all if you have a subscription. Working directly with an attorney is also an option, although generally, it's the most expensive one.

Steps for amending or revoking a living trust

Here are some of the general steps for amending a trust:

1. Choose an online legal services provider or an attorney. There are many different options for amending a revocable living trust online. If you use an online service, they should already have the forms for you.

2. Be as clear as possible. You want your successor trustee to understand how to distribute your property. Be sure to specify the name of the trust, the date, and exactly what you are changing—whether adding or deleting.

3. Have the amendment signed according to your state's laws. Amendments typically need to be signed and executed with the same formalities as the original trust. This usually involves a notary and/or witnesses, but be sure to check with your state's rules.

4. Keep your trust document and amendment together in a safe place. Wherever you kept your original trust document, you'll want to keep your amendment. Be sure you pick a place that will be easy for your successor trustee to access. 

Alternatively, do what is called a restatement of the trust. If there are substantial changes that have to be made, it might be better to do a restatement of trust. This does not revoke the original trust, but recreates it so you keep the original trust with the property that is already in it. It allows the trust to be rewritten as a new document with the necessary changes, which avoids the confusion of an amendment.

Can you amend or revoke an irrevocable trust?

While a revocable trust allows you to maintain ownership and control of your assets, an irrevocable trust does not. Some people create this type of trust under the advice and guidance of an attorney for particular reasons. By definition, if you establish an irrevocable trust, it generally cannot be revoked or changed. However, it may be possible to do so with the help of an estate planning lawyer. This may have to be done in court unless. The likelihood of success in revoking or changing an irrevocable trust in court will depend on the laws in your state and on the terms of the irrevocable living trust.

A revocable living trust becomes irrevocable upon the death of the grantor and generally cannot be changed at that time.

Knowing when to amend your living trust is invaluable for your overall estate plan. Any major life changes should trigger a review of your estate plan. Maybe your trust and will are fine "as is," but significant life changes should prompt you to review your estate plan to decide if you need to take the next step. When in doubt, check with an estate planning attorney.