When to Update Your Living Trust
Now that you have a revocable living trust in place, it’s a good idea to review and update it regularly to ensure that it stays in line with your most current estate planning goals. Ask yourself:
- Has it been more than three years since your living trust was created or updated?
- Have you had any major changes in your life or finances?
- Do the terms of your trust no longer address your most important wants, needs, and desires?
- Have there been any changes in estate and gift tax laws?
If the answer to any of the questions above is yes, it is time for your living trust to be updated. Failing to keep your trust up-to-date can frustrate your estate planning goals and result in unintended consequences.
How Often Should You Update Your Living Trust?
It’s important to update your living trust fairly regularly. In fact, we recommend that you update your living trust every three years or whenever there is a fairly significant change in your personal circumstances.
By significant change, we mean the occurrence of events such as marriage, divorce, the birth of a child, adoption, or a relevant change in either state law or tax law. You should also consider updating your living trust whenever there has been a significant change to your financial position.
Why Significant Life Changes Should Trigger an Update of Your Trust
Over time, you will probably change your mind as to whom you wish your assets to pass. At times, the beneficiaries under your living trust may predecease you, as might your executors and trustees, or you may dispose of assets and acquire new ones. All these matters should force you to reconsider the terms of your living trust and, in particular, whether your living trust needs to be updated.
In addition, as most states afford spouses a right to claim a particular share of their spouse’s estate, a material change in your financial position could result in your living trust no longer meeting those requirements. As such, you will need to revisit the provisions of your living trust to ensure that state law does not intervene to determine how your assets are distributed. Otherwise, some of your named beneficiaries might not receive the assets you wished to gift to them.
Remember to Consider Your Overall Estate Planning Objectives
Every time you update your living trust you should consider your entire estate plan and then each aspect of your plan to ensure that it meets your overall objective. For example:
- Do you need to name a new trustee or successor trustee?
- Have your minor beneficiaries grown up? If so, the terms of the trust may no longer be appropriate.
- Are any of your adult children having difficulty managing money? If so, it may be more prudent to place their inheritance under the management of a trustee rather than giving it to them outright.
Always be sure to carefully consider your whole estate plan and not just your living trust. Remember, every aspect of your estate plan interacts with every other part.
How Do You Update a Living Trust?
Generally, if the change you want to make to your trust is small, such as a change in the successor trustee or adding a sentence or two for clarity, an amendment to the trust will suffice.
On the other hand, if you have already made a number of amendments and the trust document has become hard to read because there are so many amendments, a restatement of the trust will be better as it will eliminate the confusion.
A restatement is also a better option if the reasons for forming the trust have changed, or if most or all of its provisions need to be amended. A change in the number of beneficiaries, how trust principal or income will be distributed, and/or in the laws governing the trust are other reasons why you might want to restate a trust rather than amend it.
Finally, while a simple amendment to a trust allows you to make minor changes to a trust document, it is sometimes better to make an entirely new one. When this is the case, a restatement allows you to change everything except the name of the trust.
Contact an Experienced Estate Planning Attorney
Contact an estate planning attorney regarding any significant life events or legal issues that might affect your living trust. An experienced estate planning attorney will review your trust and make the changes necessary to ensure that it will still achieve your estate planning goals. For more information, contact our law firm to arrange an initial consultation. Call (703) 553-2577 or use the contact form on our website.
The information on this site is for general informational purposes only. The information presented in this site is not legal advice or a legal opinion. You should seek the advice of legal counsel of your choice before acting upon any of the information in this site.