How to Revoke an Irrevocable Trust
When you start reading online about trusts, they sound like the best of all possible worlds. A trust can make your property invisible to the probate court and to creditors. It is like creating a doppelganger of yourself that gets to spend your money but doesn’t have to pay taxes. Mortality has no effect on an irrevocable trust. It just continues going about the business that you, in your capacity as its grantor, programmed it to conduct, whether you are alive or dead. Of course, you can’t have it both ways. If you want a trust you can tinker with incessantly, choose a revocable trust. If you want one that drapes a cloak of invisibility around your property, choose an irrevocable trust. If you choose a revocable trust, its property still belongs to you while you are alive, as far as the IRS is concerned. If you choose an irrevocable trust, you give up control over it; you cannot override the instructions in the trust instrument just as the sorcerer’s apprentice in the fairy tale cannot stop the brooms from carrying water from the well after he has brought them to life. It is difficult, but not impossible, to take an irrevocable trust out of existence. For help making wise decisions about trusts before or after they become irrevocable, contact a Bronx estate planning lawyer.
Terminating the Trust by Agreement of All
An irrevocable trust, once it legally owns property, belongs to the beneficiaries at least as much as it belongs to the grantor. Therefore, the grantor can only dissolve the trust with written consent from the beneficiaries. If a beneficiary is a minor or cannot consent because of ill health or a disability, a court-appointed guardian ad litem can do this on the beneficiary’s behalf. It is best to involve the court in this process to avoid future disputes. You should also state the dissolution procedures clearly in the trust instrument.
You Can Decant a Trust If You Can’t Revoke It
It is often easier to decant an irrevocable trust than to terminate it. Decanting a trust is when you transfer its property to a new trust, thereby dissolving the old one. The terms of the new trust instrument can differ substantially from the old one. The process of decanting a trust is easier if you describe it in detail in the trust instrument of the old trust.
Can a Court Revoke the Trust Without the Grantor’s Consent?
In rare cases, a third party can file a lawsuit against a trust. If the plaintiff prevails, the court might dissolve the trust or order it to pay money. Disputes like these usually occur when the grantor established the trust specifically to evade its financial obligations to the plaintiff.
Schedule a Confidential Consultation With a Bronx Estate Planning Attorney
An estate property lawyer can help you structure your irrevocable trust in ways that you will not need to dissolve or decant it. Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.
Source:
nysenate.gov/legislation/laws/EPT/7-1.9