When does a revocable trust become irrevocable?
- Are you wondering, “When does a revocable trust become irrevocable?”
Are you wondering, When does a revocable trust become irrevocable?
A revocable trust becomes irrevocable when a “triggering” event causes the trust to go from revocable or irrevocable. The possible “triggering” events can be found from reading the terms of the trusts. The most common triggering event is the death of one of the trustors (settlors). The terms trustor and settlor are a more legal way of saying the “creator” of the trust.
Most trusts have one or two trustors. When a couple s married, then both married persons are usually trustors of their family trust. A single person could be the sole trustor of his or her trust. A married person could also be the sole trustor if he or she creates a trust with only his or her separate property.
Most revocable trusts created for single persons become irrevocable upon the death of the trustor. When this occurs, most of the key provisions of the trust become irrevocable (unchangeable). At this point, the beneficiaries usually become set and the amount of gifts and bequests are “locked in”.
When a married couple create a trust, both persons are considered the trustors. When one of them die, then a part of the trust usually becomes irrevocable and unchangeable. When one of the trustors dies, the family trust is often divided into two or sometimes three new trusts. The first new trust is often called the “decedent’s trust” or some name similar. This trust is almost always irrevocable. The second trust created is often called the “Survivor’s Trust”. There may also be a third trust which is often called the “Disclaimer trust”.
Decedent’s Trust – This trust is created upon the first death of one of the spouses. The Decedent’s Trust is almost always irrevocable, meaning the beneficiaries cannot be changed. The Decedent’s Trust typically holds one-half of both spouses community property and may also contain the separate property of the spouse who has died.
Survivor’s Trust – Upon the death of the first spouse, the Survivor’s Trust gets created. The Survivor’s Trust typically holds one-half of both spouses community property along with the surviving spouse’s separate property. The Survivor’s Trust is often revocable, meaning the surviving spouse could change the beneficiaries or use up all the funds held in trust and even close out the Survivor’s Trust whenever they want.
Disclaimer Trust – Some trusts also create a third trust upon the first death of one of the spouses. The Disclaimer Trust is often used when the family has a very large amount of wealth and the family is trying to minimize taxes.
The most common event to change a trust from revocable to irrevocable is the death of a trustor. There are other events that could change a revocable trust to an irrevocable trust. The best way to know for sure whether a trust has become irrevocable is to get a legal opinion by an attorney. Call us at 800-501-9620 to determine if your Trust is revocable or irrevocable today.