If you have an existing Revocable Trust that you no longer need, should you revoke the Trust?
At Shutt Law Firm, we frequently review existing estate plans for clients (by the way, we review existing estate plans for free). When we review existing estate plans, we oftentimes see revocable living trusts that really aren’t necessary any longer.
For example, sometimes the existing trust document created an “A-B Trust” (sometimes called a “Bypass Trust”), which is a type of trust designed to minimize estate taxes. However, that estate tax reason no longer exists for the vast majority of us because the estate tax exemption is so high ($11.4 million per individual for 2019). In other words, if a married couple has an A-B Trust designed to minimize estate tax, but their estate is valued at less than $22.8 million, then the couple no longer has a tax reason to have that A-B Trust.
So, what do we recommend if the Living Trust is no longer needed? There are really three options:
Option 1: Keep the Living Trust as-is
Sometimes, there’s no good reason to have the trust, but there’s also no good reason to get rid of the trust. If you already have the trust, and it’s really not hurting anything, then it’s generally easiest and most cost-effective to just keep the trust document as-is.
Option 2: Terminate the Living Trust
If the trust is burdensome (like many A-B Trusts are), then you may want to just terminate the trust. Sometimes, simple really is better. If you can simply your life by simplifying your estate plan, then terminating the trust and just using a Last Will & Testament instead may be your best option.
Option 3: Modify the Living Trust
A common misconception is that a trust is a document. That’s actually not correct–a trust is not a document. A trust is a little like a company, and a trust has rules (like bylaws in a company), and those rules are set out in a document. That document is usually titled a “Trust Agreement” or a “Declaration of Trust.” So, if you want to modify the trust, what you’re really doing is modifying your trust document.
With a Revocable Trust, you can modify your trust document. So, technically, your trust still exists if you modify the trust document; you just update the rules that govern how your trust operates. To simplify your trust, all we need to do is update your trust document. It’s generally easier and more affordable than our estate planning clients would have guessed. You can keep your trust but bring it line with what you really want by simplifying the document.
To ask a legal question or get legal help from and Texas Wills and Probate lawyer Isaac Shutt, use the online contact form to the right or call (214) 302-8197. If you prefer to meet at the law office in person, the estate planning attorneys will gladly offer a free consultation.
Visit www.ShuttLawFirm.com for more information on changing your revocable living trust, terminating your trust in Texas, or having a free estate planning consultation, you can send the estate planning lawyer an email at email@example.com.
Shutt Law Firm’s office is conveniently located just north of Dallas, and just south of Plano, TX. The law office is near the intersection of highway 75 and Campbell Road in Richardson, Texas.
You can also call Mr. Shutt or Mr. Hall at (214) 302-8197 for more information on the topic discussed in this article or to discuss a different legal matter.
Please consider the Shutt Law Firm for probate in Texas, Texas Last Will and Testaments, estate planning, living trusts, or you need Richardson probate lawyers serving Dallas, Plano, Allen, McKinney, Garland, Addison, Denton, TX, Collin County, Tarrant County, Rockwall, Ellis, Grayson or surrounding North Texas area.
DISCLAIMER: Nothing in this brief article constitutes legal advice. The information provided herein is merely provided in the spirit of education and is believed to be accurate as of the time it was originally prepared, and laws change. If you have a legal question, you should consult a lawyer for your specific legal situation. Further, nothing in this article shall be construed to have started an attorney-client relationship. No such relationship exists until both you and and an attorney at Shutt Law Firm sign an engagement letter.
By Isaac Shutt