If you want to protect your assets, you can issue an irrevocable trust. An irrevocable trust, as opposed to a revocable trust, means that altering or canceling the trust is not allowed without permission of the beneficiary. However, you may worry that you need to cancel the trust because of a deception or because of tax reasons. Thankfully, it is still possible to cancel an irrevocable trust -- here's how:
Inform The Beneficiaries
Check your state law regarding the canceling of irrevocable trusts. In many states, all it takes is the consent of the beneficiaries to dissolve the trust. Meet with your beneficiaries, and explain the reasons you want to terminate the trust. If the beneficiaries agree, get it in writing to present to the court. Some states require the consent of the trustee or a court order. In the case of minors, it may be impossible to cancel the trust without the consent of a parent or guardian.
Obtain and Fill Out the Proper Forms
Obtain the "Revocation of Trust" forms from your local probate court or from a lawyer, like Cormac McEnery. On the forms, you must include a logical reason for dissolving the trust. Some sound reasons to dissolve a trust include:
- the dissolution of the charity you created the trust for
- an unexpected illness
- a change in your mental state
Be aware you may have to attend a hearing and convince the judge to cancel the trust. List the name of the trust, state of origin, the beneficiaries, and date of creation. If you run out of room listing beneficiaries, list them on another page.
Write a paragraph explaining that all beneficiaries agree to the cancellation. Include a copy of the original trust along with the beneficiary names, and send it by certified mail or private delivery service to the trustee so you have proof of the date.
It is helpful to inform your trustee ahead of time that you plan to cancel the trust. You will need to sign the papers along with the beneficiaries in the presence of a notary public.
Get Your Trustee to Devise a New Trust
Creating a new trust is an alternative to completely dissolving it when you can't get all the beneficiaries to agree. Your trustee has full control over your trust and assets, which means they can create a new trust with terms that suit your current circumstance. Assets can be sold or transferred under the new terms.
Dissolving an irrevocable trust is a complex procedure. It is advised to seek the services of an estate planning attorney to help you navigate the process.
