Want to amend your trust? As a recent case out of Missouri shows, you may need a few legal tips about how to do it right.
The case involved Dr. K.R. Conklin, who hand-wrote some modifications to his trust in 1996. He and his wife were embarking on a cross-country trip, and just in case something happened to them, they wanted to change the distribution of stuff in their trust.
Thankfully, Dr. Conklin survived the trip. However, when he eventually died in 2009, a fight ensued between his children -- who were beneficiaries in his original trust -- and his stepchildren, who were named in the hand-written amendment, but not the original trust. The Missouri Supreme Court determined that Dr. Conklin's hand-written letter wasn't an effective amendment to his trust.
So how can you amend a trust so that it's fool-proof? Here are a few legal tips to keep in mind:
1. Know What Type of Trust You Have.
Trusts come in two varieties: Revocable and irrevocable, which just describe whether the trust can be changed. Every state is different. In some states, all trusts are considered revocable unless otherwise specified; in other states, it's the opposite (and in still other states, all trusts are irrevocable).
If you have a revocable trust, generally speaking you're good to go and can freely amend the trust. If not, you may have to consult an estate attorney to have the assets of an irrevocable trust "decanted," or transferred into a new irrevocable trust with different terms. Be aware that some trusts just can't be altered through a simple amendment.
2. Be Explicit.
One of the problems with Dr. Conklin's letter is that it was never "delivered" to the trustee (which could have been accomplished by mailing it) and it wasn't explicit enough that it was an amendment. To make sure you're using the correct language to amend your trust, it may be best to consult an attorney. But if you're in a rush like Dr. Conklin was, try to be specific about when the trust amendment operates, and explicitly state that your amendment isn't just a wish or desire, but that you are actually intending to alter the terms of the original trust.
3. Do You Even Need to Amend Your Trust?
Finally, it's worth asking whether you even need to amend your trust. A well-written trust document will make room for property you acquire later, or even children you have later. There may also be tax consequences to altering a trust, depending on how you're doing it.
It's generally advisable not to change a trust unless you want to alter the trust in a way that wouldn't be automatically taken care of. Buy a new house? That's probably covered in the original trust document. Want to add or remove a trustee? That might require an amendment -- and the help of an experienced estate-planning attorney near you.