How to Fix Broken Trusts in Tennessee
My role as an estate planning attorney regularly involves fixing legal documents that for various reasons no longer achieve the current goals and desires of the parties involved.
Oftentimes, such as in the case of a will or a revocable living trust instrument where the person who created the instrument (the “settlor”) is still living and competent, it is relatively easy making desired changes or amendments to such documents or revoking them entirely and starting over altogether with new documents.
It also comes as no surprise to anyone that settlors, trustees and beneficiaries of irrevocable trusts oftentimes become dissatisfied with the terms of the irrevocable trust due to changing circumstances over time. Fortunately — as the many Tennessee settlors, trustees and beneficiaries of irrevocable trusts we regularly work with are relieved to discover — Tennessee law permits under certain situations and using certain legal procedures for the modification or termination of an irrevocable trust.
Depending on the situation, a trustee and/or the beneficiaries of an irrevocable trust governed under Tennessee law may or may not be able to modify or terminate an irrevocable trust with or without the necessity of court approval. In other situations it may be possible to transfer assets from an existing irrevocable trust to a newly created irrevocable trust with more amenable terms. This latter process is commonly called “decanting.”
Before a modification, termination or decanting of an irrevocable trust occurs, it is important to take into consideration the tax consequences of any such modification or termination on the trust and/or the beneficiaries. Furthermore, attempting to modify, terminate or decant an irrevocable trust could subject the trustee to personal liability exposure if Tennessee law is not carefully followed and a current or contingent beneficiary disagrees with the changes.
For these reasons, a Tennessee attorney whose practice focuses on trusts and estates should help you with the modification, termination or decanting of an irrevocable trust and the related tax and non-tax consequences.
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