What’s the difference between a living or revocable trust and an irrevocable trust? Change.
A living or revocable trust is a stand alone estate planning document, often executed with a pour-over will. A revocable trust can be changed or amended over time as circumstances and needs change (K.S.A. 58a-601, 602) – e.g. someone gets married, divorced, has children, receives an inheritance, retires, or dies. A revocable trust becomes irrevocable when the settlor or grantor (the person who set up the trust) dies (K.S.A. 58a-813(b)(3)).
By contrast, an irrevocable trust usually cannot be changed or amended, although some exceptions, including “decanting” exist. Since 2011, Missouri has allowed decanting by statute (V.A.M.S. 456.4-419); Kansas allows decanting under common law with court approval. The administrative terms of an irrevocable trust can often be changed (e.g. a new trustee appointed, the trustee changing locations, the trust moving from Kansas to Missouri or vice versa). But the substantive or dispositive provisions of an irrevocable trust often cannot be changed – who gets what, how long the trust lasts, and other issues. An irrevocable trust must also file a federal fiduciary income tax return (Form 1041) if income exceeds $600 for a fiscal year, and pay a higher income tax rate than an individual on a compressed tax schedule. Learn more at Taxes 101.
My law firm, Johnson Law KC LLC, is experienced counseling clients from all stages and walks of life on every aspect of estate planning and the probate process. We can help you answer all your estate planning and asset protection questions with confidence and friendly expertise. If we can serve you or your family with your trust or estate planning questions, please call (913.707.9220) or email us (email@example.com) to schedule a free, convenient consultation.
(c) 2015, Stephen M. Johnson, Esq.