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Estate Planning: Who can amend a trust?
Estate planning

Estate Planning: Who can amend a trust?

Q: Both of my parents are in assisted living. Their trust needs to be changed, but I’m not sure that they will understand the necessary changes or why they need to be made. Can anyone else change the trust, possibly the power of attorney?

A: First you need to verify if the trust is amendable. The most common trusts are but you will want to make sure.

Once you know that the trust is amendable, you will want to verify who can amend it. The most logical people to have the authority to amend a trust are the Settlors.

You’ve indicated that your parents, who I assume are the Settlors, may not have the faculties to amend the trust. This obviously poses a challenge, but remember, just because people are becoming older and they may be, as my dad would say, “slipping," doesn’t mean that they don’t have the mental faculties to execute an amendment. You may consider talking with your parents; doctors to get an expert opinion.

Assuming that your parents lack the mental capacity to execute an amendment, you may need to investigate alternative options. One possible solution is an Attorney-in-Fact, or AIF, appointed under the terms of a Power of Attorney, or POA.

POAs often times grant the authority to an AIF to deal with estate issues and documents like a living trust. The power is not always there, but it is fairly common. If the authority is there, you will have a couple of additional concerns.

First, does the trust allow an AIF to amend it? Trusts sometimes contain provisions that limit the authority to amend to the Settlors. If there is a limitation, the AIF may not be able to amend the trust.

Another concern is does the AIF have self dealing issues. AIF’s are usually prohibited from taking any action that might benefit themselves. If the amendment that you are contemplating benefits the AIF, then they might not want to take that action. Self dealing issues can cause AIFs a lot of trouble.

Finally, if all fails, the successor trustee may be able to docket the trust with court and ask it to issue an order allowing the trustee to deviate from the terms or to amend the trust. It’s nice to have a court order because it protects all of the parties. The down side is the cost.

Look at the trust and talk to the attorney that drafted it to see what options, if any, are available.

Christopher W. Yugo is an attorney in Crown Point. Chris’ Estate Planning Article appears online every Sunday at Address questions to Chris in care of The Times, 601 W. 45th Ave., Munster, IN 46321 or to Chris’ 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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