The phrase “irrevocable trust” seems final—like something set in stone. However, recent news from Rupert Murdoch’s media empire reveals that, in some cases, even an irrevocable trust can be challenged. Despite an ironclad legal structure, Murdoch’s attempt to change the future of his company sheds light on how complex trusts can be.
What Is an Irrevocable Trust?
An irrevocable trust is a legal document that transfers assets out of a person’s control during their lifetime. Once assets are placed in an irrevocable trust, the person who created the trust—called the grantor—cannot usually change or cancel it. This is why many people think of an irrevocable trust as untouchable. But, as Murdoch’s case shows, it might not be entirely unchangeable.
Can You Change an Irrevocable Trust?
In most cases, an irrevocable trust is not meant to be altered. It protects assets from creditors, taxes and even lawsuits. For example, it can help ensure that your children or other beneficiaries receive what you intend without interference.
According to the University of Melbourne, legal loopholes, specific clauses in the trust, or actions in “good faith” can sometimes allow a trust to be amended. Murdoch is attempting to rewrite his irrevocable family trust to keep control in his son’s hands, even after his death. Although this type of move is rare, it raises the question of how much power a grantor has over an irrevocable trust.
When Might You Want to Revoke or Change an Irrevocable Trust?
There are several reasons someone might want to alter an irrevocable trust:
- Change in Family Dynamics: Relationships, as in the Murdoch family, change over time. A person may decide that their original decisions no longer make sense due to new circumstances.
- Tax Laws: Changes in tax laws can also be a reason to consider altering a trust. If a law changes, it might impact the financial goals behind the trust.
- Mistakes: Courts may allow changes if a mistake was made when drafting the trust. However, proving this can be difficult.
How Does a Court Decide If You Can Revoke an Irrevocable Trust?
In his situation, Murdoch’s legal team will argue that changing the trust is in the best interest of his heirs. The court must then decide if this reasoning is valid. While his case involves a massive business empire, the same basic principles apply to more typical family situations. If a family member can show that changing the trust benefits all parties, a court may allow the modification.
What Should You Do If You Want to Change Your Irrevocable Trust?
You must talk to an estate planning lawyer if you’re wondering whether you can change your irrevocable trust. A lawyer will review the trust’s language and determine if there are any ways to alter it legally. They will also explain how state laws may impact your ability to revoke or change a trust.
What Happens If You Can’t Revoke an Irrevocable Trust?
If the trust cannot be changed, the original terms will stand. This can be both a blessing and a curse. For example, in the Murdoch case, his other children may feel upset that they don’t have the same control as their brother.
In your family, the inability to change a trust could mean family members feel left out or unfairly treated. For this reason, it’s essential to plan carefully when creating an irrevocable trust. You’ll want to ensure that your intentions are clear and your family understands your wishes.
Need Help Navigating Changes to Your Irrevocable Trust?
The story of Rupert Murdoch’s succession plan highlights how estate planning decisions can impact a family for generations. If you’re considering setting up an irrevocable trust—or want to know if you can change an existing one—it’s time to talk to an estate planning lawyer.
We’re here to help you navigate these complex decisions. Contact us today to request a consultation and start creating a plan that works for your family’s future.
Key Takeaways:
- Revoking an irrevocable trust: While difficult, it is sometimes possible to revoke an irrevocable trust. Some cases where it’s possible include family disputes or tax law changes.
- Family dynamics matter: Relationship changes, like in the Murdoch case, may lead to court-approved trust modifications.
- Plan for the future: An irrevocable trust can safeguard assets. However, you must work with an estate planning lawyer to avoid unintended consequences.
- Legal guidance is essential: Consulting an estate planning lawyer ensures that you follow the proper steps for your family’s unique needs.
Is it time to take a good look at your family’s finances and determine the need for trusts and further estate planning? Then it’s time to book a call with us and begin your estate planning journey!
Reference: University of Melbourne (Aug. 1, 2024) “Rupert Murdoch’s succession plan reveals much about his empire – and most of it is not pretty.“
