- What Constitutes a Valid Irrevocable Trust?
- Can There Be an Irrevocable Trust With Multiple Beneficiaries?
- How to Terminate an Irrevocable Trust in Massachusetts
- What Is a Settler in a Revocable Trust?
- Tax Consequences of an Inheritance From an Irrevocable Trust
- Can an Irrevocable Trust Be Liquidated?
A trust is legal document that allows a third party to manage the trust creator's assets on behalf of one or many named beneficiaries. The trust's creator decides what assets to place in the trust, and the creator, or trustor, also decides whether or not the trust is revocable or irrevocable. This distinction defines whether or not a trust can be changed after it's made.
If a trust is irrevocable, then it cannot be changed after it's created, even if the trustor (creator) is still alive. Irrevocable trusts are managed by a third party called the trustee, and although some types of trusts allow the trustor and the trustee to be the same person, this isn't the case with irrevocable trusts. The likelihood that an irrevocable trust's heir or heirs -- in trust lingo, they're called beneficiaries -- would be able to revoke a trust is extremely slim.
Why They're Used
Creators of irrevocable trusts usually have very specific goals in mind, although heirs may not like to hear it. One of the biggest reasons to tolerate the inflexibility of the irrevocable trust is the avoidance of estate taxes. However, if a creator is concerned that the trust's beneficiaries would use the trust's assets in an inappropriate way -- meaning, inappropriate as defined by the trustor -- then an irrevocable trust will protect these assets because the beneficiaries probably won't be able to sell the assets. What the heir or beneficiary's rights are depend on the trust's wording.
Revoking an Irrevocable Trust
Revoking an irrevocable trust is an uphill battle, but it can be done and it's not without precedent. For example, some irrevocable trusts give the trustee the right to amend and revoke the trust. If the trustor becomes incapacitated for some reason, then many state laws permit changes to an irrevocable trust. If the heirs can prove that the trustor was unduly influenced, or that the trust is fraudulent, then it may be revoked.
What to Do
If you are an heir or beneficiary of an irrevocable trust and believe that it needs to be revoked, you should run -- not walk -- to an estate or elder planning attorney. Many states allow heirs a very limited amount of time during which they can fight an estate. You'll need adequate proof, and you'll have to pay not only your own legal fees but the defense and court fees as well if you bring a lawsuit and are wrong. As a result, be absolutely certain that your case is valid and provable.
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