Modifying Irrevocable Trusts Using Nonjudicial Settlement Agreements

Structuring NJSA Wrappers, Relocating Trust Situs, Resolving Disputes, Remedying Trust Construction Issues

Recording of a 90-minute CLE/CPE webinar with Q&A


Conducted on Tuesday, September 19, 2017

Recorded event now available

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Program Materials

This CLE/CPE webinar will provide estate planners with a thorough, comprehensive and practical guide to structuring nonjudicial settlement agreements (NJSAs) as a tool for modifying irrevocable trusts in states that have adopted the Uniform Probate Code or have NJSA statutes. The panel will discuss what modifications these settlement agreements can and cannot implement and will offer useful guidance to properly structure NJSA “wrapper” provisions that will withstand IRS scrutiny.

Description

A powerful tool for amending or repairing irrevocable trusts is the binding NJSA. Most irrevocable trusts do not provide for the amending of trust terms except in instances where modification is necessary to comply with the tax code or other specified laws. However, there are two methods for repairing irrevocable trusts which most states recognize; one is decanting and the other is the binding NJSA.

An NJSA is exactly as it describes: an agreement among “interested persons” to make alterations to an irrevocable trust. Interested persons are generally defined as any person whose consent would be required in order to achieve a binding settlement were the settlement to be approved by the court.

Depending on state law provisions, the trust terms that may be modified by an NJSA are limited only by the restriction that the modification may not violate any material purpose of the trust, and would be approved by a court if reviewed.

While versatile and powerful tools for modifying irrevocable trusts, NJSAs also contain risks. Estate planning counsel should have a thorough understanding of critical drafting practices to avoid serious and costly consequences.

Listen as our experienced panel provides a comprehensive and practical guide to using NJSAs to modify irrevocable trusts, including strategic tips and drafting tools.

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Outline

  1. Amending an irrevocable trust
  2. Uniform Trust Code provisions
    1. Determination of “interested person”
    2. Prohibition against modifying “material provision” of trust
    3. What terms may be modified by binding NJSAs
  3. Other NJSA statutory provisions and variances from UTC model
  4. Using an NJSA to relocate a trust situs
  5. Obtaining court approval of NJSAs
  6. Structuring NJSA “wrapper” provisions

Benefits

The panel will review these and other key issues:

  • What trust provisions may be amended by NJSAs in states that have adopted the Uniform Trust Code?
  • What other states have statutes or trust code provisions allowing for NJSAs and how do they differ from the UTC provisions?
  • How to structure an NJSA “wrapper”
  • What are the tax consequences of making trust changes through an NJSA?
  • When would it be desirable to have a court ratify terms agreed to in an NJSA?

Faculty

DeJong, Lauren
Lauren Evans DeJong

Of Counsel
Stahl Cowen Crowley Addis

Ms. DeJong counsels individuals with regard to estate planning, estate and trust administration, asset protection...  |  Read More

Gorman, Alissa
Alissa B. Gorman, J.D., LL.M. (Taxation)

Shareholder
McAndrews Law Offices

Ms. Gorman's practice is focused on estate planning, estate administration, guardianship, elder law planning,...  |  Read More

Pena, Miguel
Miguel D. Pena, Esq.

The Law Office of Denise D. Nordheimer

Mr. Pena focuses his practice on trusts and estates, probate, wealth preservation, and planning matters involving...  |  Read More

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