A Revocable Living Trust is a great estate planning tool that offers some equally great benefits, but like a traditional Will, sometimes changes need to be made. For this, you have two options: an amendment or a restatement. Here’s how to know which one to use.
A Trust Amendment is just what it sounds like – an amendment to the existing Trust document. This method is perfect for making minor or simple changes, such as updating a beneficiary’s name or adding a single gift to your instructions for distribution. With the amendment, you’re essentially keeping the Trust “as-is,” with the exception of this one change.
And if one or two simple changes are all you make, an amendment might be the perfect choice for you. The problem comes when the Trust has multiple amendments over a period of years. Think about reading a lengthy legal document or insurance contract with its many addendums, endorsements and sections – it can quickly get confusing if you’re constantly having to cross-reference one section with other parts of the document.
Also remember that your legal heirs are entitled to see the entirety of the Trust document, amendments and all. If you’re making changes that might cause hurt feelings or worse, litigation, you may want to think twice before using an amendment to do it.
A Trust Restatement on the other hand, is a complete rewrite, or restatement of the entire Trust document. In this method, you are starting at the beginning, incorporating all the changes you wanted to make and then creating a new Trust document that replaces and supersedes the old document.
This can be helpful, since spelling out the trustee’s powers and obligations in one concise place reduces both the potential for misunderstanding along with the trust’s exposure to liability/ambiguities/interpretation. For this reason, restatements are often used to consolidate multiple amendments, making the Trust document easier to read and manage. Restatements are also appropriate when significant changes need to be made such as adding a new spouse as a beneficiary, completely cutting out a beneficiary, or changing from distributions to family members to distributions to a charity (or vice versa). Just keep in mind that a restatement can require a considerable amount of work and may not be necessary every time you want to amend your Trust.
So, which method should you choose? That depends on your unique situation. The restatement is a cleaner, more concise way to update your Trust, but can be costly because of the time required to complete. Amendments are easier to do and more cost-effective, but are really just intended for simple changes. Choosing the best method for you will depend upon the goals you want to achieve as well as the amount of money you want to spend.
Does your Trust provide the protection you need? Santa Barbara Fiduciary provides a range of fiduciary services to help you protect your family and preserve your quality of life. We can help you manage even the most complex estates, serve as your Proxy and provide guidance when you need it most. We’ll even review your current documents to make sure they do what you think they do, so you’ll have peace of mind. Contact us today!
