The reasons that people procrastinate on amending their trust, even when they know they should, are too numerous to list in one (or even 10) blog post.
One of the more common reasons people do not amend their trust is that they do not want their beneficiaries or heirs to find out they changed the trust.
This is usually because the suggested change will alter the distribution of assets or replace individuals who were to take on important roles in the trust (for example, trustees). These changes can obviously hurt the feelings of anyone who may be negatively affected by them.
Under trust law in California, upon the trust becoming irrevocable (for example, when all trust creators pass away), all the beneficiaries of the trust and the heirs of the creators are entitled to a copy of the trust and any amendment subsequently created.
It is not uncommon for us to review the deceased’s trust and any executed amendments with the heirs and beneficiaries in our office and for someone to learn that, according to the original trust terms, they were to receive a considerable part of the trust estate, but, due to a later amendment of the trust by the trust creator, they were completely written out, or their portion of the trust estate has been considerably reduced.
To avoid this situation, one of the things that the creators of the trust, seeking to create an amendment, can do is, instead of creating an amendment, create a restatement of the trust (sometimes known as an Amendment & Restatement).
What is the difference between an amendment and a restatement?
While an amendment is a specific change to your trust, in contrast, a restatement is a total rewrite of your trust that makes all past versions of your trust and any subsequent amendments made before the restatement null and void.
So, you may wish to change your trust. Still, you want to avoid the change being obvious to your trust beneficiaries and heirs upon your passing, who, as mentioned above, will be entitled by the law to a copy of your trust and any later amendments. The obvious solution is to create a restatement of your trust. That restatement is the only version of the trust that your heirs and beneficiaries are entitled to read; therefore, they will not have any right to review and compare any previous version of your trust with the latest restated version.
Important: any future simple amendment created to the restated version of the trust would be considered part of the trust. A restatement only null and void the past amendments and versions of the trust, not any future ones.
Of course, if you wanted to (again) restate a restated version of your trust, you are fully within your rights to do so.
There is no limit to how many restatements of your trust you can create.
Other than avoiding unpleasant situations for the trust beneficiaries or heirs upon the passing of the trust creator, what are some other reasons trust creators would want to consider restating their trust?
Age of Trust
You created your trust many years ago, and the language in it does not take into account changes to the law; for example, people make their trust, fund it (transfer assets such as their home or bank accounts into it), and then, as the years pass, forget all about it. When they remember that they have a trust, they will most likely want to have it reviewed and make specific changes. Because trust law evolves, most likely, the attorney will need to make many changes to various sections of the trust. In such a case, the attorney will want to make a restatement of the trust because there are so many changes that need to be made. The attorney will not simply create a new trust because, by creating a new one, the client would have to remove all the assets they had in their original trust to their new one. Suppose, instead, a restatement of a trust is drafted. In that case, no transfer of assets is necessary because the restatement is, in fact, the same trust as before, only redrafted to take into account the client’s wishes and changes to the law.
Different Attorney Reviewing
When you get your trust reviewed by an attorney different from the original lawyer who created it, Most attorneys will not amend a trust that was drafted by another attorney but will instead tell the client that they recommend a full restatement of their original trust. The reason is that since the reviewing attorney did not draft the original trust themselves, they cannot be sure that everything written in the trust is correct and accurate. Once the restatement has been executed, the same attorney that restated the trust should have no problem in the future creating a regular amendment for any changes needed for the trust.
To Many Amendments
When there are too many amendments to the Trust - As mentioned, when a trust is sent to the heirs and beneficiaries, it will include, in addition to the trust, all amendments done to the trust. The more amendments created for a trust, the higher the chances of confusion and disagreement between the parties involved in the trust distribution. If there have already been a few amendments made, the attorney will most likely recommend drafting an amendment and restatement to incorporate all past amendments into one restated trust.
Conclusion:
An amendment and restatement of a trust can be a valuable tool in certain circumstances for people with older trusts, people with multiple amendments, or people who want to avoid unpleasant situations for their loved ones whose portion of the trust estate may have changed during the creator of the trust’s lifetime.
Do you need assistance with an amendment or restatement of your trust or perhaps drafting your initial trust? Either way, we would be delighted to assist you with your estate plan. If you need our assistance, please fill out your information in the “Contact Us” Section so we can review it and reach out to you as soon as possible!