Changes to Tax Laws Should Prompt Review of Existing Trusts

Generally, irrevocable trusts are created with the intention that they will not be adjusted based on subsequent circumstances. Still, you should regularly review the terms of an irrevocable trust to see if changes in the law or your personal situation might warrant exploring the possibility of a revision. 

Many people establish irrevocable trusts to minimize tax exposure. However, the amount that an individual can exempt from gift and estate taxation has changed over the years. Congress passed legislation in 2025, hiking the estate and gift tax exemption to $15 million per person, with further future increases tied to the inflation rate. Accordingly, federal taxation might not be a reasonable concern any longer based on the expected value of your estate.  

There are other reasons why you might wish to consult with Kimberly Paton, Esq., who has 40 years of experience, regarding updates to an existing trust. Some people create a legal instrument to fund a charitable cause, but over time, the beneficiary charity ceases to exist or its mission changes. In other cases, legal developments might bar the donation or render it obsolete. Pursuant to the cy pres doctrine, the trust can be revised in a way that mirrors the initial intention of the trust grantor as closely as possible. 

Another potential method of modifying trust plans is known as “decanting.” This process transfers assets from one irrevocable trust into another one with terms that better suit the grantor’s current goals. There is no New Jersey statute specifically addressing trust decanting, so it is critical to speak with a knowledgeable lawyer to assess whether this common-law option is possible under the circumstances. 

New Jersey’s Uniform Trust Code does offer additional ways to alter an irrevocable trust. One method is to petition the court for a revisions based on a mistake or a change in circumstances. Should the trustee and all beneficiaries agree, a modification that retains the primary purpose of the trust can also be made. 

At The Paton Law Firm LLC in Fair Lawn, we advise North Jersey clients on a wide range of matters relating to trusts and estates, including potential revisions to irrevocable trusts. Please call 201-470-4801 or email [email protected] for a free initial consultation.