Trust Restatement

Trust Restatement, or Trust Amendment?

You want to amend your revocable living trust. Your lawyer has told you that you need a trust restatement. What’s the difference, and which should you prefer?

The basic rule

A trust restatement is really just the ultimate amendment. Assuming that you retained the authority to amend your trust, you can amend it by completely replacing the language. In other words, something like: “I hereby amend my trust by deleting all of its terms and replacing them with this entirely new document.”

Notice that we prefaced this by saying that you retained the power to amend your trust. Why would you have created a trust without retaining the power to amend it? There are several reasons, but an unamendable trust (while the original signer is still living) is uncommon.

Of course, you might not have been the one to sign the trust. In that case it might not be as clear that you have the ability to amend — or restate — the trust. Look at the document, and talk to your attorney.

Why a trust restatement?

Assuming that restating the trust is an option, why should you exercise it? The primary reason: to keep from having to deal with financial firms, MVD, the County Recorder or other entities.

When you established your trust, you should have gone through the process of “funding” it. That generally means that most assets should have been retitled to the trust’s name. If you were to create a whole new trust, you would have to repeat that work, and run the risk of failing as to some assets. The trust restatement lets you have a whole new trust document without having to go back through the trust funding process.

Of course, you could just amend your trust. But it quickly becomes hard to keep track of provisions. You could annotate a copy of the original trust showing where revisions have been made. But you still have to keep all the documents together and organized. Plus you risk the possibility that someone will misplace a key provision, or that an amendment might refer to the wrong section. Our general rule at Fleming & Curti, PLC: once you’ve made one or two amendments to a trust, the next change should probably be a restatement.

Does it cost more to restate a trust?

Usually, yes. But not always, and not always a lot more. And even when it does, the small additional cost will help keep the trust’s integrity clear.

Another benefit to restatement of older trusts: as the law of trusts evolves, practitioners see new ways to improve flexibility and meet your goals. A restatement allows us to update the entire document, rather than just making a single change. But yes, that does come with some additional cost.

We see a lot of clients’ documents ten, or fifteen, or even thirty years after they were originally signed. It’s rare to see all of the documents in place, unmarked and pristine. If we can get a single document that contains the entire trust, that increases the likelihood that it will stay intact. So that’s another benefit of restating a trust rather than amending it.

Can someone else restate your trust (or can you restate someone else’s trust)?

Maybe. We have written before about trust decanting. In Arizona, at least, a decanting is often accomplished by a document called a trust restatement.

For maximum flexibility, you might give someone the specific authority to restate your trust. That might be someone called a trust protector, or a special trustee. In some cases, it might even make sense to give your successor trustee the authority to restate your trust. Let’s talk about your circumstances.

Who gets a copy of your trust restatement?

What a great question. OK — we know we asked it ourselves. But still….

Say your original trust was called the “Panorama Trust Dated June 27, 2006.” On July 3, 2021, you restated the trust. What’s it’s new name? The Panorama Trust Dated June 27, 2006. No one at the bank, or the brokerage house, or the County Recorder’s office, needs to know about the update, any more than they would if you had just changed one paragraph by an amendment.

Of course, the changes might include a change in trustee(s). That does need to be conveyed to the appropriate organizations. But we do that by preparing a new Certification of Trust, and circulating that document. It might (or might not) refer to the restatement.

Not in Arizona?

Sorry. We know Arizona law, but we’re not conversant in the law of other states. Oh, of course we know a thing or two about a few other states. After all, we write a weekly newsletter that reports on cases from all over the country. But our knowledge about non-Arizona legal issues is, as they say, a mile wide and a micron deep. Talk to your local attorney.

We hope this helped. We want to try to make these difficult concepts more approachable. Let us know if you think we nailed it — or not. We’ll try to answer your reasonable questions about trust restatements.

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