By: Martin M. Shenkman, CPA, MBA, JD
What about amending a revocable living trust? You can draft any legal document on your own. The real issue is should you? While this might generally be a relatively simple and inexpensive process, more might be required. How old was the trust? Did the initial trust reflect appropriate planning? Have legal or tax changes made it advisable to do more than just change beneficiaries? If the trust is more than a few years old, it will not have been updated to reflect the 2010 Tax Act, state law changes and more. With so much economic turmoil, is it really possible that there have been no changes in your circumstances? Have you evaluated why you are using a revocable trust rather than an irrevocable trust (only the latter is likely to provide much protection from lawsuits, as but one example). If there is nothing else to change or improve in the existing trust, you could have an amendment to your revocable trust created to change the desired item. However, if the attorney who drafted the document is consulted, he or she should have it on word processor and change a few simple items, like the names of a charitable beneficiary, may be less work than an amendment, and by signing a new amended and restated trust, you avoid the interpretive issues of having two documents. If you are consulting with an estate planning specialist in your state, there may be a host of other issues that might come to light that you might choose to address. If it is really that simple, and there are really no other changes necessary (that requires professional judgment), it should be a pretty simple and inexpensive process. Also, if your amendment or new fully restated trust (usually the better option) are not signed with the appropriate formality, they will not accomplish your goals. Your state may require two witnesses and a notary. Your local estate planning attorney will know the rules and assure it's done right. A few questions to review with your attorney when you discuss the change in charitable beneficiaries: Have you verified that the charities qualify for the estate tax charitable contribution deduction? Since only 5,600 estates a year will face a federal estate tax, will you? If so, you certainly can afford an attorney (and need one for tax planning). If not, why are you making bequests on death to charity? If instead you make the charitable gifts (contributions) while alive, or your heirs make them, you or they may qualify for a charitable contribution income tax deduction. That beats getting no estate tax or income tax benefit. Have you coordinated your durable powers of attorney and trusts, especially with respect to the charitable bequest? Can your agent under your power of attorney make a gift to the charity as an advancement of the bequest under your trust?
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