Now that most of us have trusts… or have been thinking about getting one… ok, sometimes for several years! The burning question becomes: “When should I update a trust?” Or, “How often do I need to review my documents?” Just remember, life is a delicate thing and it is much better to have your affairs in order BEFORE a mighty wind blows!
There are those (you know why you are!) who sign the trust, pack it away, and never, ever look at it again – Even though the attorney has given you a HOMEWORK ASSIGNMENT that will complete the plan. This article is written especially for YOU!
How to Update a Trust to Cover Everything?
It is always a good idea to go over any Trust and the Will that’s written AFTER the initial flush of accomplishment has faded. You know what they say about “not seeing the forest for the trees?” This is what I mean. As you update a trust, it’s important that you REALLY look at the trust, examine the details to be sure you understand what it does. You may be surprised to realize that there is a key provision or two that you really want to be added… or you may see that something you want changed.
As You Determine When to Update a Trust
Ask Yourself These Questions
In order to understand when it is time to review or update the trust now or at a later date, consider these:
- Is it a revocable living trust for a couple?
- Does it split into sub trusts at the first death?
- Is the split mandatory or discretionary?
- Who are the successor trustees?
If these questions leave you scratching your head, you are not alone. If this is Greek to you, then that’s a BIG clue that perhaps it’s time to see your Trust and Estate Attorney again for a quick refresher course.
When to Update a Trust? Tune Into the News!
Pay attention to those news stories and pesky warnings on your favorite financial blogs! They may provide an early warning that it’s time to update your estate plan, will, and/or trust.
For example: If the last time you updated your trust was prior to 2010, you may have missed all the craziness about the Federal Estate Tax being no longer in existence! So those who died in 2010 did not have to pay the Estate Tax. But wait… Did you know that it returned the following year?
Crazy, I know! For a year there was no estate tax due for those who timed their death exactly right. Then it came back, but now there is only tax due for an estate worth more than $5,000,000 plus (there is an increase every year). But wait! – Those old trusts that split are a now total nuisance for the surviving spouse with no upside. The reason for the split has disappeared unless you want to preserve and protect your assets from a surviving spouse who remarries and disinherits your children.
Whew! Yep, maybe check in with your Estate Attorney. Update a trust? It may be time!
Autumn is a Great Time to Update a Will and Trust
Update a Trust now and consider it as a gift to your family this coming Holiday Season! Truth be told, as a general rule, is a good idea to review your Will or your Trust each year. Now that the kids are back in school and the temperature is dropping at night, think back on this year. Have any major changes occurred in your life? Remember to take into account changes in your life AND those of your children or family members named in your documents. Better to update a trust than to be met with a surprise or regret.
Ask yourself questions like:
- Do I still have faith in the named successor trustees?
- Has my daughter matured enough so that she can finally receive her inheritance at age thirty, instead of, sixty?
- Are there additional children, friends or family to be added to the will or trust?
- Have my finances changed radically, like a substantial up-tick in my income or assets, or I have retired?
- Do I want to add a charitable gift to my will?
- Has my son joined a cult leaving his wife and ten children?
While that last one is meant to be tongue-in-cheek, if you have a situation that comes close, you may want to update your trust and give your son’s share of the estate in trust for the support of the children!
Update Your List of Trust Assets Often
Be sure to update the list of trust assets anytime an asset is sold or acquired! This is a very simple process and can typically be addressed quickly and at minimal cost. Your first step is to contact your Trust and Estate Attorney via email with your updated asset list. It is always best to phone your attorney to let them know to expect your addition. Your documents will be amended and require your signature (and notary or witness). You will receive a copy at signing and should file them with your originals at home or in your safe deposit box.
Photo Credit: A special note of appreciation to EssieB for the use of her photo in our post about when to update a trust. We all know that with one swift gust of wind it all can change. Best to be prepared!
This blog contains general information and is not meant to apply to a specific situation. Please seek advice of counsel before proceeding as each case is unique.