More and more people are taking advantage of the estate planning benefits of trusts. A trust can provide a useful tool in which a person can designate how his or her assets will be administered and distributed without having to force family members to go through probate on those particular assets that are part of the trust.
Indeed, with the assistance of a seasoned estate planning attorney, you can have a great deal more control over how your assets are handled, and how items will be taxed, during and after your lifetime by employing strategic use of trusts.
As you may know, trust can be either revocable or irrevocable. In simple terms, the difference between a revocable and irrevocable trust is that with a revocable trust, the assets in question remain in the estate of the grantor (i.e., the person who created and funded the trust). By contrast, with an irrevocable trust, the assets move out of the estate of the grantor.
Of course, both types have benefits. Many people choose an irrevocable trust because there are tax and other benefits that arise if the assets in question are moved out of the grantor’s estate.
In this blog, we will focus on irrevocable trusts. Specifically, we will talk about how you can change the trustee of an irrevocable trust under Florida law. If, after reading this blog, you have more questions related to your own personal circumstances, please call us at Doane & Doane. We are experienced estate planning attorneys, and we are more than happy to assist you in planning for your financial future. We can be reached at 561-656-0200.
Modifying Irrevocable Trusts
Trusts, in general, have enjoyed increased popularity over the last several decades. In fact, a good number of families have one or more trust in their financial portfolio. Those trusts may have been made irrevocable when they were created, or they may have become irrevocable because of the death of the person who created the trust.
Even though trusts are popular, the provisions of trust might become less relevant or less appropriate based on changed circumstances within the family. It might even become necessary to modify or terminate the trust.
Yet, you may wonder that if a trust is irrevocable, how can it be changed? Doesn’t its “irrevocable” nature mean that the trust cannot be changed? Well, contrary to what you might think, it is actually possible to modify or even terminate an irrevocable trust. To be clear, there are steps to be taken to ensure that the modification is done properly. But, in some circumstances, changes to an irrevocable trust might not be as difficult as you would initially assume.
Modern Irrevocable Trust Mechanisms
In recent years, many trusts, including irrevocable trusts, are written specifically with modification or termination procedures built right in. The reason for those provisions is to make it easier for a trust to change in order to better serve the needs of the family.
Yet, even if that kind of flexibility is not written into the trust documents, Florida (consistent with many other states) has loosened their laws to make irrevocable trust modifications easier.
Now, let us talk about modifications specifically with regard to changing a trustee.
How to Change the Trustee of an Irrevocable Trust
Changing the trustee of an irrevocable trust is relatively common. When a trust creator depends on an individual trustee or several specific trustees, it becomes very difficult to have a smooth administration of the trust when those trustees die, retire, or become incapacitated.
In addition, the use of “family trustees” might thwart the administration of the trust if succession to a younger generation of trustees is not optimal for the goals of the trust.
Finally, the acceptability and suitability of a trustee may simply change as time goes on. Thus, a new trustee is the best course for the administration of an irrevocable trust.
Accordingly, here are a few steps you need to go through in order to change the trustee of an irrevocable trust.
1. Procedures Already in Place? First and foremost, check the trust documents themselves to see whether there are provisions already written in the trust that provides for replacing the trustee. If the trust documents have those procedures, then you can simply follow them.
2. Beneficiary Consent. If there are no pre-written procedures in the trust document, then you can contact all of the beneficiaries of the irrevocable trust to obtain their consent to remove the trustee. This is an effective solution unless there are beneficiaries who are unnamed (such as children of a family member who have yet to be born) or there are minor children beneficiaries.
3. Go to the Grantor. If the grantor (creator) of the trust is still alive, then it may be possible to remove the trustee with the consent of the grantor.
4. Get the Court Involved. Once you have obtained the consent of the beneficiaries, or the grantor, or both, then you need to ask the court to make the trustee change official. Having an attorney assist you is vital here because it is helpful to support any consent given with certain legal grounds for the replacement, like the previous trustee’s mismanagement or inability to act as a fiduciary.
Let Doane & Doane Help You with Your Irrevocable Trust Questions
At Doane & Doane, we have the resources and experience to help you understand how to change the trustee of an irrevocable trust, and how to navigate all of the issues that come with irrevocable and revocable trusts. We also are happy to assist you in creating a trust as part of your estate planning process. Having helped many clients with their estate plan, Doane & Doane’s estate lawyers in Florida have seen first-hand how challenging disputes can arise when inheritance comes into play, and when the parents are not clear about their wishes ahead of time. Let us help you avoid those possible disputes by creating a thoughtful, sophisticated estate plan now.
So, if you think it is now time to get started on your own estate plan, give us a call. Our estate lawyers in Florida are ready to assist you and get you that peace of mind you need. Call Doane & Doane today for more information at 561-656-0200.