How does an irrevocable trust work
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Get the beneficiaries to agree. The most common and direct way an irrevocable trust is changed is through agreement by the beneficiaries. This must be done according to the laws of the state governing the trust and must be approved by a state court (often before a probate judge). All the beneficiaries, including those who receive current income and those with future interest, and the trustee(s) must communicate their consent to the court through petition and/or affidavit.
Establish a new trust. If the trustee of the irrevocable trust has wide enough latitude in accessing the assets of the trust and can invest or allocate them, a new trust can be established with somewhat different terms and the assets poured from the old trust
into the new one. This is an option in situations where the beneficiaries will not agree to a change in their rights under the trust, and, in such a case, the new trust will have to preserve the beneficiaries' rights
Sell the assets. Again, if the trustee is empowered in the original trust document to do so, it is possible for the trustee to sell some or all the assets of the trust to another trust with different terms. This process is not tax free, unless possibly if the original irrevocable trust is already defective and considered a grantor trust by the IRS. As a result of the sale, however, assets that are continuing to appreciate can be sold to a new trust, while the old trust will hold cash.Source: ehow.com