Q: I set up a trust about 10 years ago. Since then, I have spent down my estate and am unsure whether I should keep the trust for the limited assets I have remaining. My question is should I keep my trust and if so, why? How do I revoke it? Can my heirs just ignore it?
A: Lots of questions here. I'm going to start a little out of order. Assuming the trust is revocable, you can revoke the trust by following the terms within the trust agreement.
If the trust agreement in silent on how to revoke the trust, you can revoke the it by executing a will or codicil which specifically references the trust and, presumably, revokes it. You also can revoke the trust by executing a clear statement to that effect in writing.
I suppose your heirs could just ignore the terms of the trust, but they would do that at their own risk. I'm not sure what the trust provides but I'd be nervous advising a trustee to do anything but follow the terms of the trust. Maybe it would work out or maybe the trustee would get sued.
If you decide to revoke the trust, it becomes a little more complicated. Again I'm not sure what the trust provides, but if an attorney drafted it, I'm guessing that it has flexible language that addresses your current situations.
Estate plans are drafted to grow with a client as well as shrink. I'd take a good look at the trust to determine if it still meets your needs and distributes the property the way you want it to.
If the trust still meets your needs, why revoke it? Even if it's more than what you need, it shouldn't hurt you by keeping it. You've already spent the money on the trust, why throw it away now? It doesn't cost you anything to keep it.
If you are determined to do away with the trust, maybe you can defund the trust instead of revoking it. Remember that a trust only controls trust property. If the assets aren't titled in the name of the trust, chances are the trust isn't going to control it.
Now having said that, take a look at the pour over will also. Some pour over wills provide that if the trust is no longer in existence, the property should be distributed out according to the trust's terms. If your will provides language similar to that, you may need a new will also.
The "how" is easy; it's the "should" that becomes a bit more difficult. If the trust still provides what you want, I'd consider leaving it alone. If you still want to eliminate the trust, I'd consider defunding it and set it aside in case you need it later.