Can I modify the terms of a living trust? I run across this question a lot in my office and online from spouses and children of families who have created living trusts to protect their families and assets. The short answer is this: It depends. Let’s look at some ways a living trust can be modified.
A living trust or revocable trust is a legal instrument that partially substitutes for a will. The creator of the living trust, called a Settlor or Trustor, has the power to amend and/or revoke the entire trust he or she created according to the terms of the trust under Probate Code §§ 15401(a) and 15402.
The Settlor can also designate an agent through a durable power of attorney to amend or revoke a living trust, if this is permitted in the living trust instrument and if the power is given expressly in a power of attorney under California Probate Code §§ 4264(a) and 15401(c). Having a trusted-designated agent under a power of attorney that can modify a living trust can be very useful should the agent need to respond to changes in estate tax laws and the Settlor cannot make changes to the trust due to health or incapacity reasons. Settlors can put conditions and/or procedural safeguards in their trust documents to prevent abuse of this power to amend a trust by an agent.
Note, however, that upon the death of the Settlor, a living trust will become irrevocable. This basically means that a trust cannot be easily revoked as it once was when the Settlor was living. In many cases, once a trust becomes irrevocable, the trust cannot be amended without court action and/or without consent of all the beneficiaries of the trust.
There still may be a chance for a trust to be revocable in cases where there is more than one Settlor to a living trust and one of those Settlors is still living. This is the case as well if there are two Settlors and if only one passes away, which typically happens when two spouses create a living trust together and one spouse dies.
I have seen this question a lot in connection with this scenario: Mom and Dad created a living trust way back, naming all of their children as beneficiaries in specific shares. Dad passes on, and Mom inquires about making an amendment to the trust with regard to changing the beneficiaries under the trust created by Mom and Dad. Depending on the terms of the trust, Mom may be permitted to make amendments or revocations to the trust or subtrusts created after Dad’s death.
If you are wondering if your trust is amendable or whether you need to make an amendment to your trust, it is best to speak with an estate planning attorney to insure your trust will permit the amendment in question to achieve your present goals. Amendments can be very complex matters, so do not go it alone when you consider preparing an amendment to your living trust.
