Skilled Counsel On Trust Modification
Creating a revocable trust to distribute wealth to your family members or others can have many benefits. It often enables you to avoid or minimize estate taxes, and to authorize a trustee to manage wealth on behalf of a beneficiary who may not be able to do so effectively or responsibly.
If circumstances change, however, you or your beneficiaries may want to modify the terms of the trust. Can you?
The short answer is yes, under some circumstances. At Orsbon & Fenninger, LLP, in Charlotte, we help you take advantage of changes in North Carolina law that allow for such modifications. We invite you to give us a call to discuss your specific situation in a confidential consultation with an experienced attorney.
What Are The Options For Modifying Your Trust?
At common law, a trust that was set up as irrevocable could not be modified by the person who set it up. Today, in modern times, there is more awareness of the need for flexibility. Increases in the federal estate tax exemption have led to enhanced interest in using trusts as a sound estate planning tool.
The North Carolina Legislature has therefore adopted a uniform act to make it easier to modify an existing trust, even if it was created as irrevocable. The applicable statutes are North Carolina Code 36C-4-410 and following.
Under this new law, it is possible in some cases to modify a trust with the consent of the creator of the trust and its beneficiaries or, when necessary, to get court approval to modify an irrevocable trust. But there are many factors that must be considered such as whether or not the beneficiaries agree to the change.
Besides modification, another possibility is “decanting,” which allows the trustee to make a distribution into another continuing trust rather than directly to the beneficiary. Such discretion by a trustee may be needed, for example, when an intended beneficiary develops a substance abuse addiction or a disability that could cause dissipation of the funds.
Our experienced trust attorneys have been closely monitoring the developments in the law. We can help you understand what your options are and guide you to a resolution that makes sense for situation.