As I’ve said many times before, estate planning is an ongoing process. This is particularly true of living trusts. In order to achieve your goals, it is vital that you update your trust over time. When should you update your trust, and how? That is the subject of today’s post.
When to Update a Living Trust
There are three instances when you should consider updating a living trust. The first is a change in personal circumstances. By that, I mean things like the birth of a new child or grandchild or getting married. Such events could alter your desired beneficiaries and the shares they receive or who you want to manage your affairs (for instance, newlyweds will likely want to make their spouse the health care decision maker). Secondly, similar to a change in personal circumstances, any significant changes in your finances could warrant amending your trust. Finally, the passage of new laws might make parts of your trust obsolete. A good example is the recently-enacted Tax Cuts and Jobs Act, which doubled the federal estate tax exemption amount and overhauled the business taxation structure.
How to Update a Living Trust
I cannot stress this enough: do NOT update a living trust on your own. Your attempts to do so may be legally invalid or, worse yet, cause severe unintended consequences. The best thing to do is contact the attorney who originally drafted your trust. He or she is likely to be most knowledgeable about its terms and provisions. However, if your attorney is retired, no longer in practice or has moved to a different city, then you can reach out to a new attorney. Personally, I offer free estate planning reviews to prospective clients.
The hard part is getting a living trust in place initially and funding it. Once the trust is created, updating it throughout the years is fairly easy, provided that you know when and how to do so.