A properly created and funded revocable living trust is one of the best estate planning tools available today. Though not everyone needs a living trust, these tools are excellent for anyone who wants to ensure they keep their affairs private, avoid probate, and limit how much their estate will have to pay to wrap everything up.
Yet living trusts are not a “fire and forget” estate planning weapon. Like other estate planning tools, a revocable living trust is something you need to review and revise as necessary.
In general, taking the time to look over your trust every year or so is a good idea. Additionally, if you experience a significant change of circumstance, reviewing and updating your revocable living trust is probably a necessity. Here are some questions you can ask yourself when deciding if you need to contact your estate planning attorney to update your revocable living trust.
Has my marital status changed?
If you are going through a divorce, planning on getting married, or have had a marriage annulled, it is vital for you to contact your lawyer so you can update your trust. Marriage, or the end of a marriage, changes many factors affecting your estate plan. The property you and your spouse own while you are married will be divided between you after your divorce. Once that happens you and your spouse will be individual owners of the property as determined in the property settlement. You’ll have to adjust your living trust to reflect this new reality.
Has my financial situation changed?
A revocable living trust is designed to serve as the legal owner of your property and allow you to transfer it to new owners after you die outside of the probate process. Needless to say, if you begin acquiring new property you have to ensure that you transfer it into the trust’s name. The process of retitling personal property into the name of your revocable living trust is known as funding. This funding process can take time, and depending on the type of property you have acquired, you might have to take different steps to ensure the trust becomes the new legal owner.
Do I still want the same trustee?
Most people creating a revocable living trust choose to serve as their own trustees. In some situations, choosing someone else to serve as a trustee can be beneficial. Also, if you have chosen yourself to serve as trustee, you will likely have also chosen several replacement trustees who’ll be able to take over should you become incapacitated.
In any event, should you change your mind about your trustee, you need to change the trust to reflect your new choice.