Can an Arizona Irrevocable Trust Ever Be Changed?

From its name, it is reasonable to assume that an irrevocable trust can never be changed. However, there are a few different circumstances that allow a trust originally intended as irrevocable to be altered, dissolved or replaced. If you believe that specific instructions left by a trust settlor should no longer be followed, you should speak with a qualified attorney about whether modification is possible under Arizona law. 

Generally, when someone looks to alter an irrevocable trust, a key is whether the proposed revision conforms with the material purposes of the legal instrument. Specific situations that can justify a change include the following:

• Consent of beneficiaries — Pursuant to Section 14-10411 of the Arizona Revised Statutes, courts can approve a modification to noncharitable irrevocable trust when all beneficiaries agree to the change, and the revision does not conflict with a material purpose of the trust. Similarly, a court might also approve a revision even when there is not unanimous agreement, as long as the interests of any nonconsenting beneficiaries are protected. 
• Decanting — Should a trustee have the requisite authority, they might transfer assets from an irrevocable trust into a newly created trust that has the same beneficiaries. This is referred to as “decanting.”  In some cases, this is done to correct a mistake the settler made in drafting the trust or to ease the distribution of assets. You might also consider this if a beneficiary has special needs or there is a concern about exposure of trust assets to creditors. 
• Judicial determination — There could be instances where the best way to accomplish the objectives of the settlor is to alter the trust itself. Arizona Revised Statutes Section 14-10412 says that when circumstances arise that the settlor did not anticipate, courts may modify or terminate a trust in order to further the purposes of the instrument. A judge can also modify the administrative terms of a trust if they are impractical or wasteful. 

If an irrevocable trust no longer fits today’s realities, a knowledgeable Arizona wills and trusts lawyer can assess the document’s material purposes, identify all necessary parties and advise whether beneficiary consent, a court petition or decanting offers the safest, most efficient path to the resolution you seek.

Jeffrey P. Hall, PLLC, has offices in Chandler, Phoenix and Peoria to assist Arizonans with various concerns relating to revocable and irrevocable trusts. For a free initial consultation, call 480-409-5174 or contact me online.