"Prediction is very difficult, especially about the future." Niels Bohr, Danish physicist (1885-1962)
When you signed that irrevocable trust years ago, your daughter was happily married to a fella you would have hand-picked for her. A miracle. Unfortunately, who could have predicted that this fella would "date around" after the wedding? Not good. To make matters worse, against your attorney's advice, you appointed "Mr. Right-turned-Mr. Wrong" as the trustee over an irrevocable trust for your daughter. Awkward. So, just how "irrevocable" is that irrevocable in your irrevocable trust?
Fortunately, the answer is a legal proceeding known as a "trust reformation." Under the right circumstances it could be your cure for estate planning-induced insomnia. In fact, the subject is well-addressed in a recent Smart Business article in the form of an interview with Mark Sales, of Dykema Gossett PLLC. I would commend it to your reading.
Note: A trust can't be changed on a whim. If they could, why go to the trouble? Typically, a trust a good candidate for reform when accounting for unanticipated changes or unclear language. An irrevocable trust appointing a philandering ex-son-in-law as trustee for your daughter's inheritance could be such an "unanticipated change." Practically speaking, any change that would clarify or expedite the administration of the trust, and work to the benefit of all involved parties, might be an admissible purpose for reformation.
The process is not entirely simple, however, especially if a family business is part of the trust or if there is a charitable remainder aspect in play. Regardless, the most complicated parts tend to be emotional since trusts can put match to the kindling of family discord. According, it is essential that the process is transparent and that all parties are kept on the same book and page throughout the process. The SmartBusiness article discusses more of the possible hazards to face – legal and emotional – but in the end it is your own legal counsel who will have to determine the possibility of reformation and to then carry the water.
Reference: Smart Business (August 1, 2011) "How the Reformation of a Trust Can Benefit the Trustees and Beneficiaries"
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