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Many people choose to use a trust for their estate planning and asset protection. However, there may be times when circumstances change in a person’s life. In these cases, they may need to modify or terminate the trust. In the state of Illinois, there are a few rules and procedures that must be followed. Let’s explore how to modify or terminate a trust in IL.
Why You Might Need to Make a Change
There are many reasons why you might consider modifying or terminating a trust. One of the most common reasons is trustee misconduct. If the trustee breaches their fiduciary duties by mismanaging assets or engaging in misconduct, the beneficiaries can seek to have the trust terminated or modified.
Divorce, death, or other major changes may be another reason for trust modification or termination. For example, if a beneficiary passes away, their share of the trust may need to be redistributed between the remaining beneficiaries.
Beneficiary disputes can also lead to trust changes. Conflicts involving the distribution of assets, management of the trust, or other matters are serious concerns. In these cases, beneficiaries may seek a modification of the trust terms to resolve the dispute.
Finally, if it is a revocable trust, the creator may amend or revoke it at any time. This can be done for any reason, including changes in circumstances or personal preferences.
So, now that you know the reasons behind the changes, how can you modify or terminate a trust in IL?
Modification and Termination Rules in the Land of Lincoln
If the trust is revocable, then modifying or terminating it is pretty easy. Any changes can be made with an amendment. These addendums are added to the original trust document and outline the modification, such as changing the beneficiary or altering the asset distribution. The amendment must clearly state the provisions that required a change and be physically attached to the original document. Remember, these trusts can be terminated or modified at any time.
Irrevocable trust modifications and terminations are a little more complicated. While they are designed to remain unchanged, some exceptions do exist. Beneficiaries can make changes without heading to court in some situations. If the beneficiaries consent, then the trust can be modified or terminated. However, all beneficiaries must agree to this course of action.
If there are disputes, the Illinois courts may need to become involved. During this time, the courts will evaluate the modifications or termination requests to make sure they align with the settlor’s intent and purpose.
Sometimes, a trust must be decanted. With that, the assets are transferred to a new trust under modified terms. This can occur when the original trust no longer serves its purpose. In these cases, you can modify the terms of the trust. However, the entire process is overseen by the courts.
Let Us Assist with Your Trust Questions
While some trusts are easier to amend than others, there are some circumstances where you can work through the court system to make changes. If you want to know how to modify or terminate a trust in IL, make sure to always reach out to an experienced estate planning law firm.
At Bielski Chapman, LTD, we are here to help with any changes to your long-term trusts. Please call our office at (312) 583-9430 to schedule a complimentary 15-minute consultation.