Modifying an Irrevocable Trust

Modifying or Reforming an Irrevocable Trust?

The question of whether an irrevocable trust can be changed, amended, reformed or modified is one with an almost-surprising answer.  Can this happen?  Yes, it can.

Pursuant to Florida’s Trust Code, Chapter 736 of the Florida Statutes, an irrevocable trust can be modified if the modification or change is consistent with the intent of the grantor (i.e., the creator of the trust itself).  There are 3 scenarios in which modification in this regard is possible:

  1. When the purpose of the trust has been fulfilled, or has become illegal, impossible or impracticable to fulfill;
  2. When, due to unanticipated circumstances, compliance with the trust would either defeat or would substantially impair the accomplishment of the trust’s purpose; or
  3. A material purpose of the trust no longer exists.

Fla. Stat. 736.04113(1)

The common scenario where modification of an irrevocable trust is sought pursuant to this provision is where there has been an unanticipated change in circumstances, such as following the death of a family member, a divorce, or even changes in personal finances.

The Florida courts have broad discretion to change or terminate a trust, and even may make changes on trust distributions if the court finds that it is necessary to do so.  Fla. Stat. 736.04113(2).

Modification of a trust can also be allowed by a court when compliance with the terms of the trust no longer is in the best interest of the trust’s beneficiaries.  While the court also has discretion in this realm, it must conform as best as possible with the grantor’s intent when making changes to a trust. Fla. Stat. 736.04115.

Another way that modification of a Florida irrevocable trust is possible is through Florida common law, wherein modification would be allowed without the court needing to first make findings about the trust’s practicability and purpose.  Rather, in this situation, the grantor and all of the beneficiaries could agree to changes about the trust or even terminating the trust.  See Fla. Stat. 736.0412.

Reformation of an irrevocable trust is also possible under Florida’s Trust Code, in the event changes are needed to correct mistakes, thereby assuring that the trust itself reflects the grantor’s intent.  Fla. Stat. 736.0415.  Reformation may be sought even if the trust language is clear and unambiguous and the reformation will be permitted if it is demonstrated to the court if the mistake, whether in fact or in law, affected the grantor’s intent.

If you have concerns regarding the intent and purpose of an irrevocable trust, whether as a grantor or a beneficiary, you are best to consult with your Florida trust attorney.