Estate planning is an important responsibility for any adult in the U.S. While some aspects of estate planning and transfer are affected by federal law, especially in terms of taxes, state law shapes most of what happens when a person dies. Washington, D.C., is not a state, but it has its own local laws that affect the way an estate is managed and distributed. For example, the District of Columbia has specific laws about how to amend trusts.
Why use a trust?
There are several types of trusts. They make an ideal instrument for estate planning because the three-party arrangement of a trust is designed to manage one person’s assets for another beneficiary. Trusts are also often advantaged under the law, such as passing assets to a next-of-kin before the estate has gone through probate.
Changing a living trust
A living trust holds your assets while you’re alive and then distributes them when you’ve passed. There are two major types of living trusts: revocable and irrevocable. Unless the beneficiaries agree to it, irrevocable trusts can’t be modified after they’re established. Revocable trusts, however, can.
Revocable trusts can be amended by the party or parties who set them up. There are several nuances to be reckoned with, however. For example, if a trust holds the community property of a marriage, both spouses must agree to amend it. However, it only takes one spouse to revoke it.
Another issue with revoking or amending a trust is communication. The trustor must let the trustee about any changes they’re making. If not, the trustee will not be held liable for distributing the assets in the way that’s outlined in the trust. They are entitled to assume that the trust hasn’t been changed unless told otherwise.
Using a trust in your estate plan
Not every estate would benefit from creating a trust. However, trusts do offer advantages, so it’s important to know how to create them and amend them if needed.