A revocable trust is a legal document that allows the person who creates it, known as the grantor, to manage its assets and to maintain the right to alter the trust or its beneficiaries at any time during his or her life. This “living” trust (as it’s often called) is commonly leveraged in order to transfer assets to the trust’s heirs in order to avoid the probate process, which can be long and costly. Revocable trusts are different than wills and irrevocable trusts. Since a revocable trust provides the ability for a grantor to revoke the trust during the duration of his or her lifetime, you must understand how to do it.
Reasons for Revoking a Trust
There are many reasons why a grantor would decide to revoke a trust, though usually, the decision surrounds some life-altering circumstance, such as divorce.
Another common reason people revoke a trust is that they have so many changes to the document that it would be easier to revoke it and start over with a new revocable trust. Other common reasons for revocation include:
- The grantor wants to appoint a new trustee; or
- The grantor wants to change the trust’s provisions
Although there are many benefits to choosing a revocable trust, such as avoiding the probate process, they are not free from estate taxes and since the grantor is the technical owner during his or her lifetime, the assets in the trust are treated as part of the estate, which is taxable.
Steps to Dissolving a Revocable Trust
In order to successfully revoke a trust, commonly referred to as dissolving it, you must first take out all of the assets that you have transferred into it. To do so, a grantor must ensure that titles, deeds, and other related legal documents have ownership transferred back to him or her.
The next step is to create a legal document stating that the grantor wishes to revoke all terms and conditions of the trust in their entirety. This document is often also called a “revocation of living trust” or a “trust revocation declaration.”
It is so important to have a knowledgeable and experienced estate-planning attorney draft this up for you in order to be certain that it meets all state qualifications. He or she can also help to make sure that all of your assets have been transferred out of the trust as per the law.
The document is then to be signed and dated as well as witnessed and then finally notarized. Trusts that were registered at a specific court must have their dissolution document filed with the same court. It is also best to attach a copy of the dissolution document to your other trust papers and keep it with your new trust documents (and will).
Biddle Law Can Help with the Dissolution of a Revocable Trust
When you wish to change your estate planning documents (where applicable), it is extremely important that you do so correctly in order to ensure that your new wishes are legally enforceable. In order to achieve this, you should consult with a qualified attorney who can answer any questions you may have and walk you through the process. At Biddle Law, we care about your future and want to assist in protecting your interests. To learn more or to schedule a consultation, contact us today!