When Florida residents create an irrevocable trust, they generally cannot make changes to the document; after all, it is called “irrevocable” for a reason. Of course, this is one reason why many people prefer to plan using revocable trusts instead. The latter are more flexible instruments and offer options that let people make important changes that reflect different circumstances.
However, there are a number of reasons why people may want to repair an irrevocable trust that is broken or unable to function properly. There are 26 states across the country with statutes that make it possible to “decant” one broken trust into a new trust in order to repair challenges that do not allow the trust to function properly. These options let people create a new irrevocable trust with changed dispositive or administrative provisions reflecting differing circumstances. However, many of these laws are quite restrictive and involve difficult requirements that may be challenging to fulfill. Therefore, many people may first wish to relocate the trust to a state with more favorable, flexible laws.
These options can allow people to extend a trust that was originally set to end at an earlier date, changing it to a multi-generational dynasty trust. In addition, people could alter a trust with mandatory distributions to one with discretionary distributions, providing its beneficiaries with greater protection from creditors, divorce settlements or tax liens.
There are a number of reasons why people may want to alter an irrevocable trust, including addressing provisions that protect the interests of beneficiaries who have special needs. Another might be to acknowledge that a beneficiary is profligate and might waste an inheritance.