Depending on how a trust is structured, the trustor may have the authority to modify the arrangement, such as removing or adding new beneficiaries, changing the share of interest of a beneficiary, or altering the order of distribution of the property held in trust.
In this article, you will discover whether it is possible to modify a trust in Florida and how it can be done.
Florida Trust Modification – Revocable vs. Irrevocable Trusts
There are two main types of trusts in Florida – revocable trusts and irrevocable trusts.
As its name suggests, a revocable trust is a trust that allows the trustor to modify, amend, or even terminate the trust while he/she is still alive. Generally, many Florida residents set up revocable trusts as “living trusts,” naming themselves as trustees and remaining in control of the assets held in trust within their lifetimes.
On the other hand, irrevocable trusts may not be modified, amended, or terminated once they are signed into existence. Therefore, once the trustor transfers ownership of property to an irrevocable trust, these assets are longer under his/her control.
In Florida, irrevocable trusts are entities entirely separated from their creators. Hence, irrevocable trusts need their own tax ID number, as any taxes incurred by the income generated within the trust must be paid in the name of the trust itself.
Florida Trust Modification – As Provided by Law
Upon the trustor’s death, revocable trusts become irrevocable trusts – regardless of how the arrangement was originally structured. Then, the trustee must review the instructions in the trust instrument and proceed accordingly to distribute the assets held in trust to the beneficiaries.
If the trustor of a revocable trust is still alive, heor she has the authority to modify the trust as necessary. Modifying a Florida irrevocable trust is more complex, but it is possible. Essentially, there are two ways to modify an irrevocable trust – non-judicial modification and judicial modification.
As provided by Florida Statutes §736.0412, “after the settlor’s death, a trust may be modified at any time as provided in s. 736.04113 (2) upon the unanimous agreement of the trustee and all qualified beneficiaries.”
However, if non-judicial modification is not possible, Florida Statutes §736.04113 provide that “upon the application of a trustee of the trust or any qualified beneficiary, a court at any time may modify the terms of a trust that is not then revocable (…), if:
- The purposes of the trust have been fulfilled or have become illegal, impossible, wasteful, or impracticable to fulfill
- Because of circumstances not anticipated by the settlor, compliance with the terms of the trust would defeat or substantially impair the accomplishment of a material purpose of the trust, or
- A material purpose of the trust no longer exists”
Florida Statutes §736.04113 (2) specifies that “in modifying a trust under this section, a court may:
- Amend or change the terms of the trust, including terms governing distribution of the trust income or principal or terms governing administration of the trust
- Terminate the trust in whole or in part
- Direct or permit the trustee to do acts that are not authorized or that are prohibited by the terms of the trust, or
- Prohibit the trustee from performing acts that are permitted or required by the terms of the trust”
Florida Trust Modification – Immediately Contact an Expert Trust Attorney at Jurado & Associates, P.A.
As it is plain to see, modifying any trust upon the trustor’s death is a complex and demanding task. Contact an experienced trust lawyer from Jurado & Associates, P.A. by calling (305) 921-0976 or emailing [email protected] for an individual assessment.