Is an Irrevocable Trust Really Irrevocable?

 Posted on January 14,2022 in Estate Planning and Probate

The term “irrevocable” frightens a good many people out of taking advantage of this type of trust. Many people are afraid of putting their assets into a trust that they will not be able to take back later, which is entirely reasonable. However, there may be less risk involved with creating an irrevocable trust than you might think. The benefits of using an irrevocable trust may outweigh the risks in a number of situations as well. Finally, there are legal means for modifying even an irrevocable trust under certain circumstances. A qualified estate planning attorney can help you determine what types of trusts make sense as a part of your comprehensive estate plan. 

What Are the Benefits of an Irrevocable Trust?

The major goal for most people who create an irrevocable trust is asset protection. Assets contained in an irrevocable trust are given a rather high level of protection against creditors, judgments stemming from lawsuits, certain taxes, and others. Those the named beneficiaries owe money to will not be able to access funds contained in the trust. Since the beneficiaries cannot make voluntary withdrawals, they generally cannot be compelled to make withdrawals to pay debts. 

Is There Any Way to Modify an Irrevocable Trust?

Yes and no. In general, you cannot revoke or cancel an irrevocable trust by its very design. However, should the situation drastically change so that modifying the trust becomes necessary, there are legal strategies that can be employed. The particular strategy that your attorney may suggest will depend on a number of factors, including the language used in the creation of the trust itself. 

If all parties to the trust, including both the settlor and the named beneficiaries, agree that a modification is needed, it can likely be done. Changes may be needed to protect a beneficiary, to remove a trustee, or even to reflect a change in laws governing trusts in Texas. In most cases, you will need to petition the court to allow you to make alterations. Judicial approval is often necessary to amend an irrevocable trust. 

Another legal strategy for making a change to an irrevocable trust is called “decanting.” This refers to simply draining the trust of its assets by moving them into a different trust. Texas state law explicitly allows this practice, which can offer settlors a way out of their no-longer workable irrevocable trusts. 

Call a Bexar County Trusts Lawyer

If you are interested in creating or modifying an irrevocable trust, contact Geoff Mayfield, Attorney at Law. Our San Antonio trusts attorneys will help you understand all your options and move forward in whatever way best serves your interests. Call us now at 210-535-0870 to schedule a free consultation. 

Source:

https://statutes.capitol.texas.gov/Docs/PR/htm/PR.112.htm