If a trust is revocable, it may be amended by its creator at any time. However, what do you do with an irrevocable trust when changes occur within your family, with your beneficiaries, or possibly the law?
Some states are more liberal than others in reforming and amending documents, and changes are often necessary, especially with a special needs beneficiary. While this may not be a simple procedure in some jurisdictions, others may allow them routinely.
For example, a federal statute was changed in 2004 relative to Title XIX of the Social Security Act regarding exemptions of trusts for beneficiaries who are receiving benefits, including social security. A recent case involving the statute was decided by the State of Kansas where the trust was determined to be a countable, available resource based on the state’s interpretation that the trust did not contain sufficient language to comply with the law. The family requested a hearing on the matter, and the case was eventually heard by the Kansas Supreme Court. The decision was that the trust did meet the test, and the beneficiary should not be disqualified from receiving governmental benefits, as the trust was properly modified to meet the standards and tests. The court determined that the statute was not a circumstance anticipated by the settlors, and due to the fact that the trust was in fact modified to clarify the trust and conform to the statute, the beneficiary should not be harmed by terminating benefits.
Therefore, it may be helpful in many cases where a trust has been deemed irrevocable by either the terms of the trust or the incapacity or death of the creator to have the documents reviewed to make sure that they will work as anticipated. If not, the trust should be amended as soon as possible so there will not be any disqualification of benefits for any beneficiaries.
by: Hyman G. Darling, Esq.
Comments