When is a Florida Irrevocable Trust Modifiable without Court Approval? December 28th, 2011
Generally when a grantor creates an irrevocable trust in Florida, he or she specifies in the trust document that the trust is irrevocable and that the grantor retained no power to amend, modify, or alter the trust. Similarly, grantors routinely provide in revocable trusts that the reserved rights to amend, modify, or alter the trust are limited to grantor’s lifetime while he or she has capacity and that the trust becomes irrevocable upon the grantor’s death. Taking these principles into account, can a trust that was irrevocable from inception or that became irrevocable upon the grantor’s death, be amended after the grantor’s death?
Yes, under specific circumstances, an irrevocable trust may be amended. Usually amending an irrevocable trust requires petition filed with the Probate Court to modify or reform a trust. This can be timely and expensive and there is no certainty that the probate judge will agree to amend the trust as requested. One provision of the Florida Statutes, however, allows for amendment of an irrevocable trust without seeking judicial oversight and guidance. Fla. Stat. 736.0412 allows for nonjudicial modification of an irrevocable trust.
What are the requirements for nonjudicial modification of an irrevocable trust under Fla. Stat 736.0412?
- The grantor must no longer be alive;
- The trust was created after December 31, 2000 (but in the case of a revocable trust, it is deemed created when the right to amend terminates which is customarily the grantor’s death);
- All beneficial interests in the trust must vest within 90 years of creation unless the trust expressly authorizes nonjudicial modification;
- Unanimous consent of the trustee, all current beneficiaries, and next level of beneficiaries who take the place of the current beneficiaries upon their death or other triggering event; and
- A trust for which a charitable deduction is allowed, will not qualify until the termination of all charities as beneficiaries under the trust.
There are few limits as to the extent of the nonjudicial modifications. The statute specifically references Fla. Stat. 736.04113(2) that states that the modification may:
”(a) 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; (b) Terminate the trust in whole or in part; (c) Direct or permit the trustee to do acts that are not authorized or that are prohibited by the terms of the trust; or (d) Prohibit the trustee from performing acts that are permitted or required by the terms of the trust.”
If family members wish to alter the provisions of an irrevocable Florida trust after the grantor’s death, then they should engage a qualified Florida estate lawyer who can assist them and determine whether a nonjudicial amendment is appropriate to achieve the post mortem planning goals. If it is, then the estate lawyer will prepare a trust medication agreement based upon the unanimous consent of the trustee and the beneficiaries.
Note: This blog is designed for general information only. The information presented at this site should not be construed to be neither formal legal advice nor the formation of a lawyer/client relationship. If you would like to contact Stuart A. Rader regarding an area of probate and trust administration, estate planning, taxation, and succession planning for closely held businesses, please email email@example.com.