How to Modify an Irrevocable Trust

What Is an Irrevocable Trust?

An irrevocable trust is a trust that, by its terms, cannot be amended, revoked, or terminated by the person who created it. These trusts are commonly used for estate planning to transfer assets out of the trustmaker’s taxable estate, preserve wealth, and protect assets from creditors.

Although called “irrevocable,” Florida law does allow certain changes to an irrevocable trust under limited circumstances.

Reasons to Modify an Irrevocable Trust

Clients often want to change an irrevocable trust due to:

• Changes in tax laws or estate planning strategy
• Family or financial developments
• The desire to change beneficiaries or trustees
• A decline in the trust’s asset protection value

In many cases, the trust no longer functions as originally intended. Florida law provides several options to make changes legally.

Judicial Modification of an Irrevocable Trust

Florida Statute § 736.04113 permits a court to modify or terminate a trust if:

• The trust’s purpose has become illegal, impractical, or wasteful
• Circumstances not anticipated by the settlor impair the trust’s purpose
• Modification is in the best interest of the beneficiaries

A party must initiate a court proceeding to request judicial modification, making this a more complex and expensive route.

Nonjudicial Modification by Agreement

Under Florida Statute § 736.0412, an irrevocable trust may be modified without court involvement if:

• The trustmaker is deceased, and
• All qualified beneficiaries and the trustee agree, and
• The modification is not inconsistent with a material purpose of the trust

This is often used in family estate planning when all beneficiaries support the change. It applies to trusts created on or after January 1, 2001.

Trust Protector Authority

Some irrevocable trusts appoint a trust protector—an independent third party with limited powers to modify the trust. These powers typically include:

• Amending the trust for tax planning
• Adjusting terms due to legal or personal changes
• Resolving ambiguities in trust language

Trust protectors can act without court involvement or beneficiary consent, making this the simplest method when available.

Decanting a Florida Trust

Florida law allows a trustee with discretionary authority to “decant” a trust—transfer assets into a new trust with updated terms. This can be used to:

• Extend the trust’s duration
• Change administrative provisions
• Improve tax or asset protection features

The original trust must give the trustee broad distribution powers, and the decanting must follow Florida’s decanting statute (§ 736.04117).

Reformation for Mistake

Under § 736.0415, a Florida court may reform a trust to correct a mistake of fact or law if there is clear and convincing evidence that the change aligns with the settlor’s intent.

Termination for Uneconomic Trusts

If a trust’s value is too low to justify its costs, the trustee can petition the court to terminate or modify it under § 736.0414. This is typically used for small or outdated trusts.

Exception for Life Insurance Trusts (ILITs)

The IRS permits an irrevocable life insurance trust (ILIT) to be effectively modified by creating a new trust and assigning the life insurance policy to it—without triggering gift taxes—if:

• The trustmaker remains the same
• The trustmaker remains responsible for trust income tax

This IRS exception provides flexibility in updating ILIT terms.

About the Author

Gideon Alper is an attorney who specializes in asset protection planning. He graduated with honors from Emory University Law School and has been practicing law for almost 15 years.

Gideon and the Alper Law firm have advised thousands of clients about how to protect their assets from creditors.