{"id":12298,"date":"2021-09-05T08:38:49","date_gmt":"2021-09-05T13:38:49","guid":{"rendered":"https:\/\/legaltalktexas.hammerle.com\/?p=12298"},"modified":"2025-06-18T16:56:45","modified_gmt":"2025-06-18T21:56:45","slug":"never-say-never-can-you-revoke-an-irrevocable-trust","status":"publish","type":"post","link":"https:\/\/hammerle.com\/legaltalk\/wills-trusts\/never-say-never-can-you-revoke-an-irrevocable-trust\/","title":{"rendered":"Never Say Never &#8211; Can You Revoke an Irrevocable Trust?"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">How do you spell \u201crelief\u201d in 2021?\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">F-L-E-X-I-B-I-L-I-T-Y. As in travel, work location, masking, and estate plans.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Estate plans?\u00a0 Unfortunately, yes. Many <\/span><a href=\"https:\/\/hammerle.com\/practice-areas\/estate-planning-probate\/\"><span style=\"font-weight: 400;\">estate plans<\/span><\/a><span style=\"font-weight: 400;\"> originated decades ago and have been rendered obsolete by family, economic and tax changes.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Most estate plans can be changed. A modification here, a restatement there, perhaps a revocation followed by an execution of a new document \u2013 all possible.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Other estate plans, however, are unavoidably tied to the past. These are the estate plans that include that most inflexible of documents: the irrevocable trust.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What is an Irrevocable Trust?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">An irrevocable trust is more common than most people realize. It is the customary type of <\/span><a href=\"https:\/\/hammerle.com\/legaltalk\/elder-law\/trusts-in-texas\/\"><span style=\"font-weight: 400;\">trust<\/span><\/a><span style=\"font-weight: 400;\"> when one person \u2013 say a parent \u2013 sets up a trust for the benefit of another \u2013 say a child. The benefits can be many: creditor protection, estate tax avoidance, and control over assets.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The problem is that when things change, the irrevocable trust does not. The terms, beneficiaries, trustees, and assets are forever frozen in time.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Or are they? With a little creativity and a lot of legal knowledge, irrevocable trusts may be altered or even terminated.\u00a0\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">How to Change an Irrevocable Trust<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The common strategies include judicial modification of the trust, decanting, sale of trust assets to a new trust, trust merger, termination of a small trust and trust reformation. Each of these methods have their own requirements, but they all start with evaluating the trust document.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Begin by looking at the parties to the trust: the settlors, trustee, and beneficiaries. Are they alive? Are they competent? Do they agree on why, and how, the trust should be changed?\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Next, look at the trust provisions. Have they already been changed by a distribution agreement, a trustee succession document, or a prior modification? What law governs the trust? Is there a power to appoint a trust protector or change the terms?\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Review the trust assets. Are they worth a lot or a little? Do they include stock in an S corporation, life insurance or a promissory note? Is there a homestead or other real estate?\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Finally, consider the tax status of the trust. Were any gifts made to the trust that required a gift tax return and, if so, was one filed? Is the trust exempt from GST tax?\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When you have completed these steps, you are ready to match facts with a strategy. Most lawyers and their clients try to avoid the courthouse, so the favored strategies are those set forth by common law or contract.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">One method is for the trust to simply sell a problematic asset, such as a life insurance policy, to another trust that has more favorable terms. Another method involves \u201csmall trusts\u201d that have assets with limited value. A small trust could just be terminated, and the trust assets distributed. Yet another method involves merger, which is combining the irrevocable trust with another trust that has more favorable terms.\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If those are not available, then you need to look at a judicial modification of the trust by a court. The Texas Trust Code sets out the permissible reasons in two statutes. These are available even if prohibited by the terms of the trust document. For a complete list, look at Sections 112.054 and 115.001 of the Trust [Property] Code.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The final strategy, decanting, is also permitted by the Texas Trust Code. Decanting involves moving the assets from the irrevocable trust into an entirely new trust.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For an irrevocable trust, flexibility may be possible, but it comes at a steep cost in time, effort and money.\u00a0\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/hammerle.com\/lawyers\/virginia-hammerle\/\"><i><span style=\"font-weight: 400;\">Virginia Hammerle<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> is president of\u00a0 <\/span><\/i><a href=\"https:\/\/hammerle.com\/\"><i><span style=\"font-weight: 400;\">Hammerle Morris Law Firm<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">. She is an Accredited <\/span><\/i><a href=\"https:\/\/hammerle.com\/practice-areas\/estate-planning-probate\/estate-planning\/\"><i><span style=\"font-weight: 400;\">Estate Planner<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">, has been Board Certified in Civil Trial Law for 25 years, and recognized as a Super Lawyer for the past 10 years. She blogs regularly on<\/span><\/i><a href=\"https:\/\/hammerle.com\/practice-areas\/elder-law\/\"><i><span style=\"font-weight: 400;\"> senior issues<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> and the law and has a monthly newsletter. Contact at legaltalktexas@hammerle.com.<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>How do you spell \u201crelief\u201d in 2021?\u00a0\u00a0\u00a0\u00a0 F-L-E-X-I-B-I-L-I-T-Y. As in travel, work location, masking, and estate plans.\u00a0\u00a0 Estate plans?\u00a0 Unfortunately, yes. Many estate plans originated decades ago and have been rendered obsolete by family, economic and tax changes.\u00a0 Most estate plans can be changed. A modification here, a restatement there, perhaps a revocation followed by [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":12299,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[42],"tags":[685,1212],"class_list":{"0":"post-12298","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-wills-trusts","8":"tag-estate-planning","9":"tag-irrevocable-trust"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Can You Revoke an Irrevocable Trust? | Hammerle Morris Law Firm<\/title>\n<meta name=\"description\" content=\"While most estate plans can be changed, others like the irrevocable trust are unavoidably tied to the past. Find out how to alter them.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/hammerle.com\/legaltalk\/wills-trusts\/never-say-never-can-you-revoke-an-irrevocable-trust\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Can You Revoke an Irrevocable Trust? | Hammerle Morris Law Firm\" \/>\n<meta property=\"og:description\" content=\"While most estate plans can be changed, others like the irrevocable trust are unavoidably tied to the past. 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