The Elder and Disability Law Firm, APC
Possibilities with second trusts for estate planning purposes
It's not unusual for individuals in California looking to effectively manage their estate to establish a trust for this purpose. But there are times when someone with an existing trust may consider creating a second one. This brings to mind a related question - does a second trust revoke the first one? Generally, the answer is no since a trust is not like will in that a new one will not replace the original or prior one. This is because wills usually contain a clause that states that a new one revokes any prior documents of this nature.
The basics of trusts and trust administration are different than what applies to wills. However, it is possible for a second trust to be a restatement and amendment of the first trust; although it would technically still be considered an "amendment" and not an entirely new trust that revokes the first one. Legally, it may be possible to include a provision in a new trust that would revoke any other ones, but there are other less complicated ways to achieve the same goal.
For instance, if an individual wished to distribute assets not referenced in the original distribution paragraph, a separate distribution provision could be added instead of creating a second trust. There are, however, instances, when it may make sense to set up distinctive and separate trusts. For example, an irrevocable trust is sometimes set up separately from another type of trust to hold life insurance policies. The purpose, in this case, would be to keep proceeds out of the taxable estate of the decedent.
More than one trust could be set up to handle distribution of assets wishes if there is a valid reason to do so. Even so, an estate planning attorney might be more likely to recommend setting up and maintaining a single trust for the sake of simplicity. It also tends to be more cost-effective to have one trust rather than a second one that's established later. Oftentimes, a lawyer is able to make adjustments to an existing trust if circumstances change by altering or amending the language or making changes with designated beneficiaries.