Why is Important to Update My Living Trust?
A living trust, also referred to as a revocable trust, is an agreement between you and a trustee about how your assets will be distributed after your death. It can be used to reduce taxes and probate fees on estates; however, if the agreement isn’t updated when needed, it may not be effective. We recommend reviewing your living trust once a year and modifying it after significant changes in your life or tax laws.
This is not something that you should do alone, but instead should be done with the help of your attorney.
Some changes that merit a modification include:
- The birth of a child or adoption of a child into your family
- Divorce your spouse
- Death in the family
- Changes in estate tax legislation
- Move to a new home
Update beneficiaries after the birth of a child, adoption or death in your family.
If you have a new child, or if you adopt, it’s time to update your living trust. You’ll want your estate plan to reflect the fact that you have a new family member who deserves some of your assets. If something were to happen to both parents and the new parent was left with their children, who would take care of them financially? A living trust can ensure that all of these issues are properly taken care of in case anything happens.
If you get divorced, you will likely want to update beneficiaries and assets associated with your trust.
If you get divorced, you will likely want to update beneficiaries and assets associated with your trust.
- If you’re single, it is possible to make changes at any time without going through probate court because your living trust is a revocable document. However, if you get married or re-marry, it’s best to update the terms of your trust so that they reflect any new legal obligations regarding property ownership and distribution.
- If you’re married, the terms of a couple’s living trust are usually considered revocable until one spouse dies. Then the surviving spouse becomes the “sole beneficiary” of the trust. This means he or she can make changes on their own. Spouses should still keep their wills updated because they may need additional documents like powers of attorney or health proxies while they’re alive instead of relying solely on their wills after death.
Revoking or amending a revocable living trust can be done at any time and allows you to maintain control over your assets. However, revocable living trusts become irrevocable upon the grantor’s death and generally can no longer be changed.
Reviewing and modifying your living trust is critical for the success of your overall estate plan. This will ensure that your wishes are being followed and that your estate is structured in a way that best protects it for future generations. Discuss your circumstance with a trusts and estates attorney at Carlson & Work.
