What is Irrevocable Trust Review?
An irrevocable trust is a legal arrangement in which you transfer asset ownership to a trust. As its name suggests, it can’t be easily changed or cancelled without first obtaining consent from the beneficiary or a court.
Once you have established your irrevocable trust, you should review it periodically to ensure that it’s stil serving its purpose. Although you can’t change it easily, there are ways to make the necessary amendments.
Read the rest of this article for information about how irrevocable trusts work, how to review them, and how a lawyer can assist you with the irrevocable trust review process.
What are Key Provisions to Review in an Irrevocable Trust?
During the review of your irrevocable trust, you want to focus on certain provisions. These include the following:
- Intent. Read through the original irrevocable trust document for clarity on why it was established and accurate information about the trustee and beneficiaries.
- Assets. Conduct an asset inventory, which should include a detailed list of all assets in the irrevocable trust. They should have clear titling and valuations.
- Compliance. Check that the trustee is doing their duties, such as making distributions on time.
- Taxes. You want to make sure that all taxes are being filed properly.
- Amendments. Check if the document allows amendments or termination. Some trusts contain clauses for specific, limited changes uncer certain circumstances.
- Laws. If there are changes in the law, these will affect the trust’s effectiveness.
How Do You Change an Irrevocable Trust?
When you wish to make changes to an irrevocable trust, you’ll require consent from all bneficiaries involved. They must agree to all changes or trust termination, so that there’s a lower risk of legal disputes. Their consent should be in writing to make it official.
A more serious option is to file a petition with the court. A judge will consider the request to change the trust and check if it’s aligned with the purpose of the trust, that it’s in the beneficiaries’ best interests, and that it’s legally compliant.
In some states, irrevocable trusts allow you to make changes to an irrevocable trust by what’s known as decanting. This involves creating a new trust with the amended terms and transferring the assets into the new trust.
What are Common Pitfalls with Irrevocable Trusts?
When drafting or reviewing an irrevocable trust, there are some common errors to avoid. These include the following.
Unclear Trust Goals
If the irrevocable trust doesn’t include clarity about the trust’s goals and purpose, such as if you want to lower your estate taxes or provide for loved ones, this can result in it not being as effective as it could be. Customize the trust according to your situation and needs, while preventing mistakes that are challenging to adjust later.
Choosing the Wrong Trustee
Since the trustee has to fulfill various tasks, such as managing your assets and abiding by all terms in the trust, you want to choose someone who is responsible and reliable. This isn’t something to take lightly as the wrong person could mismanage your trust or cause legal disputes.
Not Keeping a Document Record
It’s essential to check that all deeds and beneficiary designations are aligned with the trust. Keeping a record of all documents will ensure the assets remain within the trust’s control.
Not Reviewing Your Trust Regularly
Your life situation and assets could change over time, which could require additions to the trust. There might also be serious issues that you wish to amend, such as if the laws have changed. Regularly reviewing the trust is important. You might want to consult with a qualified lawyer for an in-depth, comprehensive review.
How Does a Lawyer Help with Irrevocable Trust Review?
A lawyer can help you in various ways to review your irrevocable trust. Here’s a rundown of some things they’ll do during the review process.
- Confirm your goals for the trust. They’ll assess if the trust is accomplishing what it set out to do, such as providing asset protection from creditors or estate tax reduction.
- Review the trust structure, such as by checking who is the grantor and trustee, what powers they have, and how the trust is being distributed. It’s important to check that the grantor isn’t maintaining too much control over the assets, as this can create ownership confusion.
- Consider tax consequences. A lawyer will work with a tax professional to check capital gains treatments, income taxation, and other tax obligations.
- Check other documents, such as investment accounts and real estate deeds, so that assets are properly transferred into the trust.
- Consider the risk of future disputes, such as if the trust contains ambiguous language or legal violations. Vague or unclear wording can be challenging to interpret, which can also result in admin errors.
Where to Request a Review of Your Irrevocable Trust
If you’re ready to book a legal review of your irrevocable trust, you might wonder where to find a reputable, experienced lawyer. Instead of cold-calling traditional law firms, you can make use of an online legal platform like ContractsCounsel.
ContractsCounsel is one of the largest online legal marketplaces that gives you access to a curated network of vetted lawyers. All lawyers on the platform have the expertise required for drafting and reviewing contracts.
To request that a qualified lawyer on the ContractsCounsel platform review your irrevocable trust, all you have to do is follow these easy steps.
1. Go to the ContractsCounsel marketplace and post your project for free.
2. Wait to receive lawyer bids. You’ll receive multiple bids from lawyers directly on the platform.
3. Review the lawyers' profiles. The platform provides extensive lawyer data, such as location, client ratings, years of experience, field of expertise, and previous projects completed on the platform. This helps you choose the most suitable lawyer for your review.
4. Connect with a lawyer who matches your legal requirements and hire them for the job.
