End of life estate planning can be a difficult thing to confront. But that doesn’t mean it’s not important.
Most Americans understand how helpful having a living trust is. In fact, 76% of Americans think it’s important to have one. Unfortunately, only 40% of those people actually do have a living trust.
And even fewer will spend time updating a living trust.
Your living trust is similar to a car.
It needs to be maintained regularly so that it can stay in good working order. Our lives, circumstances, and relationships change over time. And our wills should reflect these changes.
However, unlike getting your tires rotated or your oil changed, you can update your living trust in just a few minutes. And from the comfort of your own home.
Interested in learning more? Continue reading and we’ll walk you through everything you need to know about updating a living trust.
Reasons for Updating a Living Trust
You might think that if you’ve already got a living trust, you don’t have to worry about it ever again. On the contrary, having an outdated living trust might not end up being very effective when the time comes to put it to use.
Let’s go over some of the most important reasons why you should update your living trust.
Changes in Your Family or Relationships
Have the relationships that you have with the people who are named in your living trust changed over the years? Have you become divorced or estranged with former loved ones?
You might want to think twice before leaving your precious valuables to people who you don’t even like anymore.
And, more importantly, you might’ve changed over the years too. You might want to donate your valuables to a charity or other group after your death.
On a brighter note, there might be many new and wonderful people in your life that you’d like to give to. Perhaps you got married, had a child, or have become closer to grandchildren, nieces, nephews, or made new friends.
No matter who’s been added to your life, you’d want to update your living trust if you’d like those people to get a piece of the action.
Also, if you’ve had a child in the intervening years between now and the writing of your living trust, it’s highly recommended that you review your living trust. You’ll want to name a guardian for your child should something happen to you or your spouse.
And if your kids have reached the age of majority in your state, you might want to consider giving them responsibility as your executors.
Comb through your list of representatives, trustees, heirs, executors, and guardians. Think about if the circumstances of your life and relationships have changed in anyways.
For example, are these people that you listed still able to fill the roles that you’ve assigned for them? Are they even still alive?
It’s reasons like these that you need to be updating your living trust once a year.
Changes in Assets
Another major reason for why you should update your living trust is if you’ve experienced a major decrease or increase in value in your estate.
Maybe you sold or bought a large asset or started or closed a business. Also, you might have new pension plans or insurance policies that affect the naming of beneficiaries in your living trust.
Changes in Location
If you’ve moved to a state that is different than where you originally wrote your living trust, you should speak with a lawyer in your new area. Determine with the attorney if the will is still valid.
The laws regarding living trusts vary by state. Because of this, you should never assume that an old will can meet the requirements that are demanded by your new state.
Changes in Tax Laws
Federal, as well as state tax laws, are changing constantly. You are going to want to stay informed of any changes in your state that might have an effect on your living trust and estate plan. By staying informed and consulting with a lawyer who specializes in estate planning and living trust, you can stay on top of all the different law changes.
What to Look for When Updating a Living Trust
There are several important aspects of your living trust that you are going to want to make sure are always up to date. These factors include:
- Divorce and Marriage
- Children have reached the age of majority
- You’d like to give to an organization like a charity
- You started a new business
- You’re approaching or reached the age where you’re required to start taking distributions from your 401(k), IRA, or other plans
- It’s been at least three years since you last reviewed your living trust
- Birth of a child or grandchild
- Death of a person who’s listed in your living trust
- A change in relationship with people in your living trust
- A change in the circumstances of your trustees, guardians, executor, etc.
- A large decrease or increase in your estate’s value
- A change in your tax laws
- If you’ve moved to a new state
Although you should look over everything in your living trust, these are some of the most important points to consider.
The Importance of Updating Your Living Trust Every Year
Updating your living trust once a year is a simple task that is nonetheless extremely helpful. Although it can sometimes be seen as uncomfortable or morbid, having and maintaining your living trust may save your family from a lot of confusion and arguments in the long run.
Need help with your estate planning? Contact us today to get started!