THE DANGERS OF REVOKING A LIVING TRUST
Several clients have come to me recently seeking to revoke, or having revoked, their living trust. The one who just left my law office exemplifies the reason we don’t recommend full revocation of a living trust.
Tracy and Mike created their Family Trust in another state over a decade ago. When they moved to Colorado, they decided that they didn’t need the trust any longer because of Colorado’s more streamlined probate process. The attorney they consulted helped them re-title everything that was held in the trust and then had them sign a document revoking the trust.
Only they did not re-title everything that was in the trust. Mike died a few months ago and Tracy learned that a financial account was still in the name of the trust.
Now Tracy cannot act as trustee of the revocable trust because it was revoked. She is going to have to go through a lot of rigamarole to be able to move that single account held in trust.
Had Mike and Tracy come to me when they first moved to Colorado, I would have advised them to “starve the trust”. Move everything out of it but do not officially revoke it. If there is nothing in the trust, then the trust does not control anything. As a result, the trust agreement will be an irrelevant document you can just keep around for reference. But if you actually revoke the living trust, you risk the very problem Tracy now faces. How do you control a trust asset if the trust doesn’t exist anymore?
I decided to google what advice the internet provides about revoking a living trust. I came across a number of websites and forms from “do it yourself” websites like this one https://info.legalzoom.com/void-cancel-living-trust-21475.html. But I didn’t find any qualified attorneys providing advice on how to revoke a living trust.
Some things cannot be undone. That is why it helps to work with an experienced and practical attorney who doesn’t just take a client’s orders and spits out a document. Instead, clients need advice about the consequences of their decision. That’s something you won’t get from a “do it yourself” estate planning form.