Wednesday, April 16, 2014
In recent years, many states have been updating their trust laws, thus providing new and simplified techniques to help trustees fare with challenges of administering irrevocable trusts. The following two techniques can assist advisors in solving many problems associated with irrevocable trusts:
Non-Judicial Settlement Agreements. Section 111 of the Uniform Trust Code now allows for non-judicial settlement agreements in regard to trusts. These agreements enable the modification or termination of an irrevocable trust absent court approval. Furthermore, the provision provides for virtual representation, allowing trust beneficiaries with substantially similar interests to represent the interests of those beneficiaries who cannot represent themselves.
Decanting. With respect to non-judicial settlement agreements, decanting enables a trustee to remedy issues arising from outdated administrative provisions present in irrevocable trusts, or to deal with unforeseen circumstances occurring with particular beneficiaries.
While non-judicial settlement agreements and decanting should be used carefully, they both introduce flexibility into the administration of irrevocable trusts.
See Tracy Craig, New Ways to Change ‘Irrevocable’ Trusts, OnWallStreet, March 13, 2014.