A trust is a legal entity in which one person (the trustee) manages property for the benefit of another person (the beneficiary). A special needs trust is any trust where the beneficiary has special needs. For further information on special needs trusts, click here.
Defining “Revocable” and “Irrevocable”
If you create a trust, you may specify in the trust document whether you want the trust to be revocable or irrevocable.
The terms revocable and irrevocable mean exactly what they say: If a trust is revocable, you may revoke the trust at any time. Once you revoke the trust, the trust will no longer be in effect. If a trust is irrevocable, then you may not revoke the trust. You may also specify that a trust will become revocable (or irrevocable) if a certain condition occurs; for example, you may state that a trust will become irrevocable upon your death. You may also say that certain people have the right to revoke a trust. You may also specify that certain terms in the trust are revocable and that other terms of a trust are irrevocable. The law on trusts is very flexible and allows you to create a trust with almost any type of provisions you want.
Which Type of Revocability is Recommended for Special Needs Trusts?
As to the issue of revocability of special needs trusts, the law on creating special needs trusts is the same as the law for creating other trusts: if you say the trust is revocable, the trust is revocable. If you say the trust is irrevocable, the trust is irrevocable.
In general, when I create trusts for clients, I advise the client to create a revocable trust.
You may wish to change your mind at a future date. You don’t know what your family’s situation will be like in five, ten, or twenty years from now. If you’ve created a revocable trust, and the circumstances change so that you want to do away with the trust, you may revoke the trust. But, if a trust is irrevocable, your hands will be tied, and you won’t be able to revoke the trust, even if you come to believe that revocation is a good idea. Also, if a trust is irrevocable, you may not even be able to change certain material terms of the trust.
While I advise most clients to create a revocable trust, this may not be the best choice in all circumstances. It depends on your individual case, and you should not decide on whether to create a revocable or irrevocable trust without consulting an attorney.
If you want more information on special needs trusts, you may look at Curtis Shacklett’s excellent blog, The Special Needs Trust Advisor. This blog is exclusively devoted to the topic of special needs trusts. Mr. Shacklett specializes in assisting families care for people with special needs.
The Persaud Law Office has created trusts for many families. If you would like us to advise or assist you in creating a trust, give us a call.