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When should I Review My Revocable Trust?
If you have a living or revocable trust as part of your estate plan, there are some life changes that may mean that you need to make changes to your trust. In this post we are going to talk about some of the most common life experiences that may mean your trust needs some attention too.
A key person in your trust dies. This could be a beneficiary, a joint owner, or a trustee. Your trust should name backup trustees, so that if one person passes away there is a backup trustee. It may also specify who will inherit the trust if a beneficiary passes away before you. If a trustee or beneficiary dies, it is a good time to review your trust to be sure that alternates are identified. You should also consider naming additional alternates just in case. After all the only thing certain about life is that it is uncertain.
You go through a divorce. In the event of a separation, all aspects of your estate plan need attention. Even though you feel overwhelmed with other more pressing legal matters, you need to revise your documents as soon as possible. Also, consider making updates if you have named a couple in your plan and they get separated or divorced. For instance, if you have named a married couple as guardians and/or trustees for your minor children and they divorce you will need to make decisions about your choice of guardians.
A birth can affect your estate plan, whether it is your child, a grandchild, or other family member. If you have made provisions in your estate plan for grandchildren or nieces and nephews, for example, you would want to include this new addition to the family. It is a good idea to review your trust to ensure that the birth does not affect how you wish to distribute your assets.
A change in federal or state law governing trusts and other tools of estate planning can affect your trust. Laws can and do change. If these changes in the law are significant you may need to make changes to your trust. If you are one of our clients, be sure to read our regular newsletter where we often share changes in the law.
Another aspect of legislation that may affect your estate plan is changes to tax laws. Major changes are likely coming to the current estate tax law by early 2026. While the coming election will certainly have some affect on the changes coming in the next year, the current law is set to expire and cut the estate tax exemption in half unless new legislation is passed next year. Of course, we will keep you updated once we know more, but it is certainly something worth watching out for.
Your relationship with a beneficiary or trustee can change. A common change to trusts is naming a different trustee. As mentioned above, trustees can and do pass away before the person making the estate plan. Other things can change too, including relationships and circumstances and your estate plan should reflect that. Trustees can become ill, have other family members who need care or just have circumstances arise that may mean they are no longer the best fit. In addition, your relationship with them may change, something may have happened to cause you to question whether they are really your best choice as a trustee, or you may discover that someone else may be a better trustee. If any of these things happen to you, it may be advisable to amend your trust and name a new trustee.
One more common reason for a trust amendment is to change beneficiaries. Beneficiaries receive your assets at your death. Death, divorce, or a birth may affect the distribution of your estate. Also consider the terms of the distribution of your beneficiary. If a beneficiary is young or has a substance abuse issue, you may wish to change the terms of distribution so that they can’t go on a wild spending spree with funds that you had hoped would be used for better purposes. Once your beneficiaries are older and more mature you may consider instead removing restrictions or reducing them.
If you find yourself in a situation where you need to review your trust and make changes, call us at 803-358-7214 or complete the contact form to schedule a time with our experienced attorneys. We stay abreast of changes to estate law so we can help you keep your estate plan up to date.
