New York residents may be aware that an irrevocable trust can often be used to pass down assets without paying federal estate tax. They might also be interested to learn that, despite its name, it may be possible to change certain aspects of an irrevocable trust during an individual's lifetime.
Some changes an individual may choose to make include changing how property is distributed among beneficiaries, changing trustees or changing where the trust is located and under which state law it will be governed. How this is done and the types of requirements for doing so vary in New York depending on the trust and the changes needed. For example, terminating a trust must be approved by trustees, the grantor and the beneficiaries. In New York, if a beneficiary is a minor or disabled in a way that prevents giving consent, the change cannot be made.
However, other types of changes can be made without consent from others and without court approval. Furthermore, according to the IRS, properly modifying an irrevocable trust does not affect estate tax advantages or tax advantages for generation skipping.
Individuals who are interested in establishing or modifying an irrevocable trust or who want to look into other types of estate planning documents may wish to consult an attorney. A person who has prepared an estate plan in the past might also want to consult an attorney to review the plan and see if still meets the person's current goals and needs. For example, the estate tax exemption has risen over the past decade, and therefore, most people will no longer need to take federal estate tax consequences into account. A periodic review and update is also important when circumstances, such as a divorce or the birth of a new child, have occurred.