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Modifying a trust is not a simple process. Once a trust has been established, there is a very specific legal process that must be followed, governed by the Texas Property Code, to change it. An estate planning attorney in Houston can assist you if you need to make some sort of modification to a trust, and it’s always wise to work with an attorney in these situations to ensure that everything is done legally. An attorney can also help you do everything as smoothly and quickly as possible.

Modifying a Texas Trust: Guide From an Estate Planning Attorney in Houston

Authorization and Limitations

If you are the settlor of a trust, then you have leeway to modify or amend a trust, provided you meet certain conditions. Those conditions will depend on whether you’re dealing with a revocable or irrevocable trust. If you are not the settlor, then you can only modify a trust by going to court. 

There are a few limitations even with a revocable trust and even if the settlor is the one bringing the modification. The most important is that you cannot give more duties to the trustee than the original trust assigned them without their specific and express consent. 

Revocable Trusts

If a trust is revocable, the settlor can usually modify or amend the terms, so long as this is done in writing. This is usually done when there’s been a change in personal or financial circumstances, such as if the assets in the trust have diminished and a new distribution schedule is required, or if new beneficiaries need to be added to it. To do this, the settlor should:

1. Review the Documents With a Lawyer

Carefully review the original trust with a legal professional who can confirm that it is revocable and that there are no provisions within it that prohibit a modification. 

2. Draft the Modification

Once you’re sure of what is permitted, the next step is to have your attorney prepare a written document that specifies what changes need to be made. This could be an entire re-statement of the trust or just an amendment, depending on what needs to be done. 

3. Get Consent From the Trustee

If the modification is going to give the trustee greater duties, you must get their agreement in writing.

4. Finish All Legal Formalities

Once everything is in place, you will need to notarize the amendment and sign it so that it becomes “official,” and it’s usually a good idea at this point to also inform the trustee and beneficiaries of the changes, so there’s no confusion or dispute.

Judicial Modification

If you are dealing with an irrevocable trust, then it becomes much more difficult to make any modification. Anything you wish to change as the settlor will need to go through the courts, and if you are not the settlor, you will also have to go through the courts to make a modification to any type of trust. 

Judicial modification requests brought by trustees or beneficiaries are usually required once the settlor is deceased. For example, a beneficiary may request that the court change the trustee if there are concerns that the trustee is incapable of doing their job or may not be trustworthy. The beneficiaries can also bring a modification request to specifically permit or prohibit the trustee from doing particular things. The trustee or the beneficiaries may also bring an action to terminate the trust, either in whole or part, and there may be many other reasons why either of these parties wish to make a change. 

Acceptable Grounds

Just because a request has been made to the court does not mean the court is permitted to make any change requested. There are only limited grounds for requesting a modification. One of these grounds is if the purpose of the trust has already been fulfilled. A modification or termination can also be requested if the trust has become impossible to fulfill, or the terms of its fulfillment have become illegal under new laws. For example, if one of the beneficiaries named in the trust passes away, the trust would need to be modified to, at the least, remove their name because it has become impossible to fulfill the terms of the trust towards this person.

You can also request a modification on the grounds that unanticipated circumstances have made it necessary to alter the terms of the trust in order to fulfill the ultimate purpose. For example, imagine an irrevocable trust set up with the intention to provide for a child’s future, with the original terms of the trust allowing for disbursements to pay for the child’s education, for the child to start a business, or for the child to buy a home. If that child should suffer an accident and become permanently disabled, so they now have no ability to further their education or start a business and require constant, round-the-clock nursing care, the settlor may petition the court to allow for the terms of the trust to permit disbursements for medical needs. Although this may not have been in the original trust terms, it is clearly still within the spirit of the trust, which was designed to provide for the child’s future.

Another possible grounds for bringing a modification is to modify the administrative terms to prevent waste of the trust assets or to eliminate an issue that has made it difficult for the trustee to administer the trust properly. Modifications can be requested if they are necessary to achieve the tax objectives of the settlor or to qualify a beneficiary for government benefits. Finally, modifications can also be requested if there’s been a simple drafting error.

The Court’s Responsibility

The Process

To bring a judicial modification request, a trustee, beneficiary, or settlor must follow these basic steps:

Filing the Petition

The petition must be filed in a court with jurisdiction over the trust. This is usually a probate or district court. The petition should also come with evidence that demonstrates the modification meets one of the grounds listed above.

Notify Beneficiaries

Hearing

For help to modify a trust, or to challenge a modification petition, contact Ford + Bergner LLP in Houston, Dallas, or Austin, TX today.