This blog post is going to review two common situations in which a revocable trust becomes irrevocable. There are more situations and ways that cause a revocable trust to become irrevocable, but this will just talk about the two common situations. The common situations are death of the Grantor and incapacitation of the Grantor.
1. Death of the Grantor (also called the Trustor) of the Trust.
A revocable trust becomes irrevocable at the death of the person that created the trust. Typically, this person is the trustor, the trustee, and the initial beneficiary, and the trust is typically written so once that person dies, the trust becomes irrevocable. When it becomes irrevocable, it can no longer be changed, it can no longer be amended, and you can no longer add and remove assets as easily. Once it becomes irrevocable it needs to obtain an EIN (Employer Identification Number). The Trust becomes its own entity and needs a tax identification number for filing of returns.
2. The Grantor (also called the Trustor) of the Trust becomes incapacitated.
The second common situation when a revocable trust becomes irrevocable is when that Grantor, or the creator of the Trust, becomes incapacitated and can no longer make decisions for themselves. At this point a successor trustee would need to be named. The trust is only irrevocable during the incapacitation, once capacity returns to the grantor, the trust is revocable again. This change of status is to protect the trust from being changed while the incapacitated person is still living. This protects the incapacitated person from having the trust changed or revoked while they are incapacitated. Revocable trusts are designed to be able to be revoked during the Grantor’s lifetime or amended, but at the same time, once they pass away, that is it, there is no more revoking it or amending it. The only person that can revoke it is the person that made it, so once they’re no longer living, the Trust stands as written.
This is only a quick basic overview of two common situations when revocable trusts become irrevocable. There are other times too, but these are the two most common. If you have any questions about this or other estate planning topics, you can reach out to me by phone or through the scheduling button below to schedule a time for a quick phone call or a 30-minute in-person consultation.
William C. Deveneau is an attorney practicing in Southern Vermont, including Bennington and Manchester, and New York, including Albany, Colonie, Hoosick Falls, and Troy.