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Can a Trust Be Changed? 

Explore your options on whether a trust can be changed with insights from Wood Law Group. Learn about modifying trusts in Nevada and how legal assistance can guide you.

Can You Modify a Trust?

A trust is a legal arrangement where one person (the trustee) holds and manages assets for the benefit of another person (the beneficiary). Trusts are significant in estate planning because they help ensure that the settlor’s (the trust creator’s)  assets are distributed according to their wishes. Depending on its structure, a trust can offer various tax benefits and protect beneficiaries, like minors or those unable to manage their assets. It can also skip the probate process, making the transfer of assets smoother and more private after the person’s death.

Trusts are governed by the terms (instructions) expressed by the settlor in the trust document. Once a trust has been signed and executed, its terms are legally binding and can be enforced in court. If you intend to create a trust, it’s important to ensure the terms reflect your wishes and circumstances because once the trust is set up, its terms can be hard to change.

Still, as life evolves, you might need to modify or amend the terms of your existing trust so they align with your current realities. Whether or not such a change is possible depends on the type of trust and the stipulations of the state law governing the trust. However, in cases where trust modification is possible, the procedure is delicate and should be handled by a professional for the best results.

Our estate planning lawyers at Wood Law Group are dedicated to guiding clients in Nevada through the complexities of creating or modifying trusts. With a deep understanding of Nevada’s legal landscape, our team offers personalized and comprehensive solutions to help you meet your estate planning goals. Whether you’re looking to establish a new trust or update an existing one, we are committed to providing experienced legal advice and support every step of the way.

Please read on as we explore some of the circumstances that could trigger the need for trust amendment and what it takes to modify different types of trusts in Nevada.

Common Reasons for Seeking Trust Amendment or Modification

Trust documents are usually drafted carefully and professionally according to the settlor’s instructions and vetted before signing. So why change a trust that was deemed to be acceptable in the first place?

There are several reasons why someone might want to amend a trust. Some of the common reasons why people seek trust amendment include the following:

Change in Personal or Family Circumstances

Following life events such as marriage, divorce, or the birth of a child, it might be necessary to update an existing trust to reflect the settlor’s current situation and ensure that their current wishes are accurately represented.

Marriage or divorce can significantly shift one’s plans for the future, prompting updates to ensure that a spouse is included or excluded as a beneficiary. The birth or adoption of a child or grandchild may also necessitate a modification to a trust, as new descendants are welcomed into a family’s legacy.

Similarly, when significant changes in an individual’s property holdings occur, such as acquiring new assets, an amendment might be required to incorporate them into the estate plan and shield them from estate taxes and other possible liabilities.

Mistakes in the Original Trust Document

Sometimes, a trust might contain mistakes or unclear language that, if left unaddressed, could lead to complications for trustees and beneficiaries. Amending it can correct these issues, clarify the settlor’s intent, and prevent potential problems or misunderstandings in the future.

To Modify the Trustee’s Duties

Trustees are responsible for managing trusts and ensuring their terms are followed. They draw their power from the trust document, so if their duties need to be modified, perhaps due to a change in the settlor’s circumstances or needs, the trust provisions might need to be amended.

Regardless of the reason for seeking it, a trust amendment or modification can be complicated depending on the type of trust and should not be approached lightly. An experienced trust attorney can help you understand the legal requirements for such changes and navigate the process with confidence.

Can You Change the Terms of a Trust? Considering the Different Types of Trusts

Most trusts created generally fall within these categories

  • Revocable living trusts
  • Irrevocable living trusts
  • Testamentary trusts.

Below, we explore the key features of these trusts and their capacity for modification to help you understand your options.

Can You Modify a Revocable Trust? 

A revocable living trust is a trust that is created by a settlor during their lifetime. This type of trust offers several benefits and can be used to avoid probating after the settlor’s death.

Its key feature is its flexibility—the settlor can modify or dissolve the trust at any time, as long as they are alive and has the capacity to do so. However, to retain this power of modification, the settlor must expressly reserve the right to amend the trust in the trust document.

Can You Modify Irrevocable Living Trusts?

An irrevocable trust is one that, once established, cannot be easily changed or canceled by the person who established it. 

While irrevocable trusts offer benefits like asset protection and potential tax savings, their rigid nature makes modifications challenging.  

However, modifications of such trusts are possible under Nevada law through certain legal mechanisms, including:

  • Seeking Court Approval: Irrevocable trusts can be amended with court approval. However, the party seeking the amendment must be able to establish why the amendment is necessary. 
  • Non-Judicial Settlement Agreements: Pursuant to NRS 164.940, trust beneficiaries or interested parties whose rights will be affected can agree to modify the terms of an irrevocable trust without court approval.
  • Trust Decanting: Under Nevada law, a trustee with the authority to distribute income from an irrevocable trust has the power to move assets from one trust to another even though the second trust was not named as a beneficiary in the original trust.

Each trust amendment method has its limits, predicated on the original trust’s language and the limitations imposed by state law. Legal counsel is crucial while applying these methods to ensure a successful amendment.

Can You Change a Testamentary Trust?

A testamentary trust is established according to the instructions in a person’s will and only goes into effect upon their death.

Testamentary trusts are typically considered irrevocable upon the testator’s (will maker’s) death. So, even though Nevada law does not expressly specify how they can be modified, they will likely be subject to similar amendment conditions as irrevocable trusts due to their nature. 

If you have questions about modifying a testamentary trust, you might need to consult with a skilled estate planning attorney for concrete answers.

Contact Our Dedicated Estate Planning Team at Wood Law Group for Legal Assistance

Changing the terms of a trust is possible. However, how such changes can be made depends on the type of trust. Revocable trusts can be amended or modified by the person who created them at any time. On the other hand, irrevocable trusts are generally harder to change and usually require the beneficiaries’ consent or a court order. 

Trust amendments are serious and can affect several lives. If you need to amend a trust, consulting with a skilled trust lawyer is always a good idea to ensure the changes are done correctly.

At Wood Law Group, We understand that circumstances change, and with them, so might your wishes regarding your trust. Whether you’re considering a modification or a revocation of your trust, our team of estate planning attorneys is here to help guide you through the process.

Suppose you’re looking to maximize your estate’s financial security. In that case, we can also help you create a Domestic Asset Protection Trust to shield your wealth from potential threats while maintaining flexibility.

Our commitment is to work with you to fulfill your estate planning objectives and ensure your assets are organized and distributed according to your wishes. Contact us to discuss how we can assist in safeguarding your legacy.