irrevocable trusts

How Irrevocable Are Irrevocable Trusts?~ ~ ~

Thomas E. Simmons

February 4, 2010

Disclaimer These seminar materials and Mr. Simmons’ presentation are intended to provide the seminar participants with guidance in trust and estate planning basics. The materials and Mr. Simmons’ comments do not constitute, and should not be treated as legal advice regarding the use of any particular technique or the tax consequences associated with any such technique. Although every effort has been made to assure the accuracy of these materials and comments at the seminar, Mr. Simmons and the Gunderson, Palmer law firm do not assume responsibility for any individual’s reliance on the written or oral information disseminated during the seminar. Each seminar participant should independently verify all statements made in the materials and at the seminar before applying them to a particular fact situation, and should independently determine both the tax and nontax consequences of using any particular technique before recommending that technique. No attorney client relationships are formed by virtue of this presentation or materials. Consult qualified advisors for advice relevant to your individual circumstances and objectives.

• Your Trust? Possibility for amendments is

disquieting

• Someone Else’s Trust? Possibility for amendments is

intruiging

Coming Across Irrevocable Trusts

How Irrevocable is Irrevocable?• Common Law• Trusts are “agreements”

so contract law applies• Trust agreements (like

purchase agreements) can always be modified with the consent of the parties

Is flexibility abaaaa-d thing?

If irrevocable trusts can be changed with the consent of the parties, who are the parties?

• Unborn persons• Unascertained persons• “Virtual

Representation”

• Changing trusts with consent:

• If Grantor can consent then any change is OK

• If Grantor cannot, then change must not violate a “material

purpose”

Changing Trusts

• Changing trusts without consent of beneficiaries or grantor (with court approval):

• If rights of non-consenting beneficiaries are not impaired

• To correct a mistake• If there are unanticipated

circumstances

Changing Trusts

• Termination of “small trust” (under $50,000)

• Selling trust assets to a new trust

• “Disclaimers”

• Unitrust conversions• Getting a new trustee, a

new state’s law applied to the trust, or a new interpretation of trust provisions

Other Ways to Change Trusts

The story you are about to hear is true.

The names have been changed to protect the attorney-client privilege.

[Cue “Dragnet” Theme Song]

Decanting – a New Trustee Power• Grandpa Popeye’s Trust

• Three beneficiaries: Huey, Duey, Louie

AN ILLUSTRATION OF DECANTING

Decanting is a Trustee Power to “pour” trust assets to a new trust created by the trustee (

Beneficiaries receive 20 days advance written notice

No consent of grantor or beneficiaries required (or advisable?)

Trustee

TrustEstate

Tom the Lawyer

Decanting: a somewhat frightening

trustee power?

Thank you!

Thomas E.

SimmonsGunderson, Palmer, Nelson & Ashmore, LLP