I have talked about estate planning in many of my prior posts. One of the vehicles that I have recommended that you consider using is an Irrevocable Trust.

There are two types of trusts; Irrevocable, one that is designed not to allow you to make changes and Revocable (sometimes referred to as a living trust), which allows you to make changes. The potential taxes consequences of these two trusts are very different so you should be very careful in setting up either trust. It is always best that you set up any trusts with the advice and assistance of a tax attorney and accountant.

As life goes on we often find that our circumstances or those of our beneficiaries change. Sometimes we find that these changes effect how we feel about the decisions that we had made in the past. Our relationship with our children, our children’s own economic fortunes or even a divorce can effect what we wish to have happen to our personal assets when we die.

If you have set up an irrevocable trust and you now wish to make a change, it still might be possible. Of course revocable trusts can easily be changed.

When you first set up your irrevocable trust your lawyer probably told you unless it can be shown that you were “incompetent” at the time the trust was created, you will not have any recourse as there is no way to “undo” the trust. However, some recent tax developments, as well as creative ways to apply old laws may provide ways to amend your irrevocable trust!

One possible strategy is to set up a new trust. Some states (not all) will allow a trustee, if they have unfettered discretion to “invade” principal, to take the funds from one trust and move them into another trust created with the new terms you now desire. There are some significant restrictions so you must consult your attorney and accountant before proceeding. This strategy does not require court approval.

You should be aware this strategy may expose the new trust to a lawsuit fr