It’s Not Written in Stone: Changing Bay Area Irrevocable Trusts

 

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The primary difference between a revocable trust and an irrevocable trust is change.  A revocable trust can be amended, changed, or altered simply by a new writing signed by the Settlor.  An irrevocable trust cannot be amended or changed.  Well, not easily anyway.  But there are ways to change or amend an irrevocable trust, if you know the rules.

If all the beneficiaries agree to a modification of an irrevocable trust, they may compel the court to order that change upon filing a petition (Probate Code section 15403).  However, the trust cannot be modified if a purpose of the trust requires its continued existence as written.  Although, a court can use its discretion to modify it anyway, unless, the trust has a provision that protects the beneficiaries from creditors.  In that case, the trust cannot be changed.

If the Settlor and all beneficiaries agree, they can compel a modification of the trust by filing a petition with the court (Probate Code section 15404).  If one of the beneficiaries objects, then the Settlor and remaining beneficiaries can petition the court for the change, which the court can grant provided the change does not harm the objecting beneficiary’s interest in the trust.

Finally, if the Settlor is not present and all the beneficiaries cannot agree, then the beneficiaries can obtain an amendment to the trust by arguing changed circumstances under Probate Code section 15409.  To argue changed circumstances, you have to point to a set of facts not known to the Settlor at the time the trust was created and those facts would defeat or substantially impair the purposes of the trust.  For example, if the Trust precludes the sale of a house, yet that sale is now required to provide support for the beneficiary, then a change may be in order.  And that change can occur by filing a petition with the court and asking for the proper relief.

It may be a bit inaccurate to say that an irrevocable trust cannot be changed because using these Probate Code sections could allow you to change the Trust.  But the changes can only occur upon filing a petition with the court and having that petition successfully granted.