Amending a non-charitable, irrevocable trust.
An irrevocable trust is a type of trust instrument that cannot be changed. Many people set up irrevocable trusts. There are many reasons for doing so. Many revocable trusts become irrevocable upon the death of the grantor. However, as is often the case, even the best laid plans may evolve and change over time.
Occasionally, beneficiaries of an irrevocable trust may wish to amend some of the provisions of a trust. There are really only two ways to do this. “A non-charitable, irrevocable trust may be modified or terminated upon consent of the settlor and all beneficiaries, even if the modification or termination is inconsistent with a material purpose of the trust.” Utah Code §75-7-411. If the settlor has passed away, “[a] non-charitable, irrevocable trust may be modified upon consent of all of the beneficiaries if the court concludes that modification is not inconsistent with a material purpose of the trust.” Id. The first option is available when the person who sets up the trust is still alive when the change is made. The second option is only available through a court proceeding after the settlor has died. Id.
Individuals should be cautious about amending irrevocable trusts. There are a number of reasons to set up trusts that are irrevocable. For example, asset protection trusts, which shield assets from creditors, may not function to protect a person’s estate if they are amended. Utah Code §25-6-14. Certain types of irrevocable trusts have tax planning implications. Before attempting to amend an irrevocable trust, a person should consult with the experienced attorneys at Howard, Lewis & Petersen.
