Irrevocability in Name Not Practice: Modification and Termination of Irrevocable Trusts in Fla.

More than 331 million people now live in the United States. Many Americans are moving to the South, including vast numbers into Florida since 2010, according to the U.S. 2020 census population data released by the U.S. Census Bureau. U.S News & World Report, 2020 Census Shows Fastest-Growing States. Since 2014, no state has added more new residents from other states on an annual basis than Florida, which has outpaced all other states each year since 2014, averaging over 579,000 new residents per year, see 2019–2014 American Community Survey State-to-State Migration Flows Table. While Florida is a desirable landing spot for many domestic relocations for its climate, no state income tax and strong protection against creditors, the Florida legislature has recently enacted amendments to the Florida Trust Code that make Florida a desirable location for flexible estate planning and trust administration. One of the tools available to Trusts and Estates attorneys in Florida is the ability to make changes to an irrevocable trust.

While an irrevocable trust, by name and terms, would seem to prohibit amendment of its terms, Florida law provides multiple opportunities for those interested in the trust to make changes—regardless of irrevocability. When a trust is drafted, the person creating the trust and funding it with assets, often referred to as the settlor, determines who controls the trust as trustee and who will receive assets from the trust as beneficiary. What if, after making these decisions, it becomes desirable for someone interested in the trust to make changes to these terms but the trust is irrevocable? Inheritance tax laws may change, beneficiaries’ needs may change, family circumstances may warrant revised distributive provisions, among many other unforeseen future realities. Fortunately, the flexibility of Florida’s Trust Code provides broad opportunity to address the changing needs and desires of trust beneficiaries, trustees and those serving as trust director or trust protector. The Florida Trust Code provides four effective paths for making changes to an irrevocable trust: reformation; nonjudicial settlement agreements; judicial modification; and decanting. This article will address each method in-turn because the availability of a given option requires a fact specific analysis on a case-by-case basis.

Reformation