Dear Len & Rosie,
We finished our trust in 2003. We would like to change our beneficiaries. One of our charities is out of business and we would like to give that charityís share to another. Our original lawyer has moved and the new lawyer wants to charge us to ďtalkĒ before he will tell us how much it will cost to change the trust. Can we cross out the old list and handwrite changes ourselves? We are only in our 50s and expect that there will be other changes down the line. This is getting expensive.
Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway, Sonoma, CA 95476, by phone at (707) 996-4505, or on the Internet at www.lentillem.com. Len also answers legal questions each weekday, Noon-1 p.m. and Sundays, 4-7 p.m. on KGO Radio 810 AM.
You should understand that youíre putting your new lawyer into a Catch-22 situation. He hasnít seen your trust before. That means he doesnít know what may or may not be wrong with it. He cannot give you a fee quote on the telephone without taking the risk that more work will be needed that you already donít want to pay for.
For example, there is a substantial chance your trust is an A/B trust because it was created in the early 2000s. But most married couples no longer need A/B trusts to avoid Federal Estate Tax on their deaths because the amount that passes free of the death tax is presently $5,490,000. Similarly, there may be other parts of your trust that you are not aware of that need to be updated.
Your new lawyer canít know this without reviewing the trust first. We have had many clients who either do not fully understand or may have forgotten what their trust does. This is understandable, as most clients are not lawyers. A lawyer looking to make changes to an existing trust that he or she had no part in preparing is going to have to take time to review the trust. Taking your word that itís OK is risking legal malpractice.
In some cases, itís easier and less expensive for a lawyer to skip reviewing an existing trust and do it over from scratch, by preparing a restated trust document, which is nothing more than an amendment in full replacing the entire trust document. A restated trust is better than a brand new trust, because you wonít have to transfer assets from the old trust back into your names and then have to transfer them again into the new trust.
Can you do your own trust amendment? Now youíve put us in a Catch-22. You can, but thereís no way that we can tell you that your home-made amendment is going to do what you want it to do without reviewing the trust and your completed amendment. But we can tell you that your plan of scribbling out changes in the trust document will almost definitely not work. You need a separate instrument, a trust amendment, that spells out what paragraphs are being removed, changed, or added to the trust. And you should have your trust amendment notarized so thereís evidence that you signed the amendment yourselves rather than a crooked beneficiary having forged your signatures to give himself more of your money.
You should also understand that a lawyerís role in creating a trust amendment isnít just doing a bit of paperwork. Your lawyer and his or her staff will be available as witnesses to your true intentions and your mental capacity if someone were to challenge the validity of the amendment. This is especially important if you are changing the portions of your trust to be inherited by your children.
Len & Rosie