Review Irrevocable Trusts for Potential Enhancements through Modification

American Bar Association
Fall 2019

Martin M. Shenkman and Sandra D. Glazier 

Historically, an irrevocable trust was just that, irrevocable. We would explain the concept of an irrevocable trust to clients using terms like “can’t be changed,” “carved in stone,” and so forth. Well, that may no longer the case. There are now various ways to modify or perhaps significantly revise what is still called an “irrevocable” trust.

Modern approaches to estate planning reflect consideration of these options during the drafting stage. The grant of absolute, unlimited or unrestricted discretionary trustee powers of invasion, permissible merger or division of trusts, the ability to trigger or grant limited or general powers of appointment, and broad trust protector discretionary powers (including the power to amend certain provisions, extend the time for distributions, grant powers of appointment or permit decanting of assets to another trust) can all impact the extent to which an irrevocable trust might be subsequently merged, decanted or otherwise modified.

The review and analysis of an already funded “irrevocable” trust might identify tax and other benefits which could improve the administrative provisions of the “irrevocable” trust or otherwise assist effectuation of the settlor’s (or a beneficiary’s) desires[2]. Enhancing our knowledge of these considerations and the options available to effectuate change can provide an array of estate planning opportunities.

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