ESTATE PLANNING: Trusts are not a do-it-yourself job

2013-01-13T05:00:00Z ESTATE PLANNING: Trusts are not a do-it-yourself jobChristopher W. Yugo Times Business Columnist
January 13, 2013 5:00 am  • 

Q: I have a living trust that I want to change. Do I need an attorney to draw up a new trust or can I copy the trust and make the changes that I want and have it notarized?

A: The most common way to change a trust is to execute an amendment. By executing an amendment, you can change the portions that need to be updated and leave the remaining portions intact.

Amendments are the easiest and most common way to change a trust. You can even execute multiple amendments as your needs change. For example, say you want to make Billy the successor trustee so you execute a first amendment. Then in a couple of years Billy moves away and you want to name Suzie as the successor trustee. You can execute the second amendment essentially replacing the first amendment.

Even though you can have multiple amendments, at some point too many amendments becomes a problem. I’ve seen trusts that have had five or six amendments. At that point, it becomes very difficult to determine what changes have been made and what terms the trustee needs to follow.

At that point it makes more sense to completely amend the trust and replace it with a new one. A complete amendment of a trust is known as a restatement. Essentially, a completely new trust is drawn up that uses some magic words to reference the previous trust. Once executed, the restated trust becomes the primary document and you can dispose of the previous trust and amendments. The cool thing is you don’t have to fund the new trust because it refers back to the trust that you have already funded.

Now back to your question about simply copying the trust and making the changes. First, I think that if you copy the trust, your attorney is going to get a little upset with you. Attorneys tend to be a little protective of their documents and may not like the idea of someone taking it without permission. I’d think long and hard before I copied the document.

Second, simply copying the trust with the changes isn’t going to get the job done. What you may actually do is create a new trust. In that case, you are going to have to fund the new trust with the old trust’s assets. If you miss something, you could have two partially funded trusts, and that’s not good. A trust document that has been copied isn’t likely a restatement even though that might have been your intent.

I know that paying an attorney is right up there with getting a sharp stick in the eye. However, trust’s are not a do-it-yourself project. I think because trusts have become so common, a lot of people look at them as just another document. But the truth is trusts are sophisticated estate planning tools best left to professionals.

Christopher Yugo is an attorney in Crown Point. Address questions to Yugo in care of The Times, 601 W. 45th Ave., Munster, IN 46321 or to Yugo’s information is meant to be general in nature. Specific legal, tax, or insurance questions should be referred to your attorney, accountant, or estate-planning specialist.

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