Irrevocable Trusts — Advice on Drafting and Repair

Alan S. Acker (Columbus, Ohio) has recently published his article entitled Fixing Broken Irrevocable Trusts, 31 ACTEC J. 221 (2005) [link requires ACTEC membership].

With respect to drafting irrevocable trusts, Mr. Acker suggests:

• Don’t tie the hands of the trustee to adjust to changing circumstances.
• If circumstances permit, give someone the power to amend the trust.
• Plan for qualified disclaimers to provide alternative dispositive schemes.
• Allow the trustee to terminate the trust if the trustee considers it appropriate.

With respect to already created irrevocable trusts, Mr. Acker suggests:

• Is there statutory authority to change or terminate the trust?
• If the trust was established because of a mistake, consider rescission of the trust.
• Where the trust fails to reflect the grantor’s intention or fails to meet tax objectives, consider reforming or modifying the trust.
• Determine if all material purposes of the trust have been satisfied.
• Obtain the consent of the grantor and all the beneficiaries.
• Do what you want to do anyway.