Answer to an Email Question re: Restated Trusts

Q: Is a restatement of trust different than a normal run-of-the-mill trust?

A: A revocable living trust is specifically designed to meet estate planning needs. Like all good estate plans, it is designed to anticipate changes and to accommodate many of the most common ones. However, no matter how thorough an estate plan may be, it simply can't address all the changes in circumstances we encounter in our lives. This is why most estate plans can be amended or revoked.

In most revocable living trusts, the grantor reserves the right to revoke or amend the trust in whole or in part. It's not uncommon for a person to add or delete a beneficiary or adjust the percentage or amount the beneficiary will receive or change a trustee.

Because it is so easy to amend a trust, some people do it on a fairly regular basis. I've seen trusts with eight or nine amendments -- although effective multiple amendments can make a trust difficult to read and follow. At some point, it simply becomes necessary to replace the trust in whole. In some circumstances, the trust document is outdated or fails to provide adequate provisions.

The problem with creating a new trust is that all of the assets titled in the name of the first trust must be transferred into the new one. A fully funded trust agreement takes some work and likely a person does not want to re-title assets. The thought of doing it all over again is probably a bit daunting.

This is where a restatement comes in. A restatement is simply a complete and total amendment of the original trust which replaces it in its entirety. In other words, the restatement reflects the terms of the new trust agreement and replaces both the original agreement and any amendments that may have been made to it.

The great thing about restating a trust is that it refers back to the original trust agreement and its creation. In effect, you have created a new trust agreement but you don't have to re-title the assets into the name of the new trust. Because it simply replaces the original trust agreement, it's already funded.

It's really not that unusual to come across a restated trust. As frequently as people change their minds, it's a wonder that you don't see more of them.