Why You Should Regularly Review Your Trust

One of the benefits of a Revocable Living Trust is that it can be updated when necessary. You may want to update your trust to comply with new laws or to reflect changes in your wishes or your life 
circumstances. In order to take advantage of this benefit, you should review your trust periodically to see if changes are needed. That review should take into account all of the changes in laws and regulations regarding:

  • income taxes; 
  • estate taxes; 
  • asset distributions including beneficiary designations; 
  • as well as public and private benefits including insurance; 
  • changes in your personal circumstances (health and financial); and 
  • changes in the personal circumstances of your loved ones. 

Here are some questions to consider when deciding whether it is time to revise your trust:

  • Have there been major changes in your life? Have you gotten married or divorced? Had a child get married or divorced? Welcomed a new child or grandchild? Dealt with the death or incapacity of a family member? Have you retired or made plans for retirement?
  •  Have you completely funded your trust? Are there new or forgotten assets that need to be retitled? Have you moved or bought new property? The trust cannot function as intended unless all of your assets are titled in the name of the trust instead of in your name as an individual. 
  • Have there been changes in the law that will affect your estate plan? Check with your attorney to see if there have been any changes to the state or federal estate planning laws that could have consequences for your planning. 
  • Have there been changes in the income tax law (state or federal) that will affect your estate plan? Check with your attorney and accountant to see if there have been any changes to the state or federal tax and estate planning laws that could have consequences for your planning. 
  • Who have you named as your successor trustees? These are the people who will step in to manage the assets in your trust if you become incapacitated or after you pass away. Are you happy with the people you have picked for this important role or do changes need to be made? 
  • Who has the power to remove trustees? As the Trustmaker, you can always change the trustees of your revocable trust. You can also choose to grant this power to others, such as the beneficiaries of your trust. Think about whether you would feel comfortable giving the beneficiaries of your trust the ability to replace trustees? Would they be likely to try to put a trustee in place that would follow the wishes of your beneficiaries rather than uphold your wishes? Does your Trust prevent this from happening? 
  • Have you named beneficiaries for your retirement plans, life insurance, and other investments that work with the rest of your estate plan? Do you know the income tax consequences of your choices? 
  • At what age will your beneficiaries receive their inheritance? Are there provisions for handling trust shares for beneficiaries who are under a stated age or who have special needs? Have your opinions or the circumstances of your beneficiaries changed to warrant changes in this area? For example, have any of your beneficiaries begun receiving government benefits that would necessitate holding assets for their benefit in a special needs trust? 

These are just some of the questions you should consider on a regular basis to help ensure your estate plan will work as intended. If you neglect to review and update your trust and other estate planning documents on a regular basis, you run the risk that your plan will not work as intended. This can happen because the plan is out of date or because it no longer reflects your wishes due to changes in your family and financial situations since you first executed the plan.

You can think about many of these issues on your own when considering whether you need to make 
updates to your trust. Other issues, such as those related to tax planning, will likely require your 
attorney’s input. It is important to note that you should not attempt to make any changes to your trust yourself. Consult your attorney to make sure that the changes you want to make will be legally valid. You also need to sign Amendments or Restatements of your trust with the same formalities that were necessary when you signed your original trust.

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