The name of an irrevocable trust suggests that it can never be changed — and that is the general idea of having an irrevocable trust in the first place. These are trusts that you’re only supposed to make when you’re very sure of exactly how you want to use the assets you’re putting into them. You can’t just alter or cancel them on a whim.
However, there are some cases in which trusts can be modified, depending on how they were set up. Don’t assume it’s never possible just because they’re supposed to be irrevocable.
There are some exceptions to the rule
For instance, one common clause added to these trusts, when they’re left for charitable organizations, is to allow the trust to be altered when tax laws change. These could be federal or state tax laws or any laws that alter how the trust is used. If there is a better way to do things based on the changes, it is not impossible to make them.
After all, you cannot predict how laws are going to change in the future. If you set the trust up to transfer assets to a charity over a long period of time — a decade, for example — the odds are slim that every single tax law is going to be exactly the same as it was on the day you wrote the trust. Disallowing alterations based on changes to the law would not be true to the spirit of the trust or its goals.
Another example is when a beneficiary is given a power of appointment. The person who created the trust may not be able to change it, but this beneficiary has the individual power to dictate how some of the assets are distributed, giving it more flexibility.
Your options when creating trusts
Trusts are a major part of estate planning, and this is just one example of how complicated they can get. You absolutely need to understand all of the options you have where trusts are concerned so that you make the best possible plans for your family’s future.