How Long Has It Been Since You Updated Your Trust?

Estate planning is designed to determine how your assets will be preserved, managed, and distributed after your death. It also makes provisions for how your assets will be managed in the event of your incapacitation. It’s no wonder, then, that many people believe that estate planning is a “one and done” exercise. Your wishes have been recorded, and the correct legal maneuvers have been executed. Everything is covered, right?

Well, not always. A number of circumstances can change. From your personal wishes, to new necessities, to new people in your world, life is never static. In short, it’s wise to review and possibly update your trust every three to five years. Here are a few reasons why.

Changing family circumstances. A divorce, birth of a new child, death or disability of an heir, and many other circumstances can change over time. These events will likely impact how you wish to distribute your assets, and necessitate an adjustment to your trust.

Changes to tax laws. It can be frustrating when Congress changes tax laws after you’ve created an estate plan. But this situation is common. Property taxes are another common issue that impact trusts. Will heirs be negatively impacted by newly enacted property taxes laws? You should investigate ways to mitigate that risk. Most any time when tax laws change, it’s time to review your trust. You want to ensure that it offers the planning and protection you and your beneficiaries need.

Changes to your assets. Over time, assets can grow, and expose you or your heirs to new levels of taxation, or other complications. For example, your trust might co-own investment property with other investors, or the overall worth of your estate might open the door to estate taxes.

On the other hand, assets can shrink. This might create a need to redetermine some of your wishes regarding how to divide up cash or property among your heirs. When you dispose of an asset, the trust should be updated to reflect that change.

Revocable trusts can generally be altered at any time, provided that the trustors remain mentally competent. Reviewing the trust on a regular basis helps to ensure that your current wishes are carried out. It also reduces the possibility that the probate court will get involved.

If a few years have passed since you created your trust, it’s time to review its terms. This is especially true in light of the new California property tax laws, and proposed changes to income and estate taxes which Congress is considering at the moment. Call our office to schedule an appointment with our estate planning attorney, and we can help ensure that your trust still serves your interests.


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