If you took our advice and set up a living trust, congratulations — you’ve taken the first steps to managing your estate, before and after your death. However, your work isn’t quite done. Many life events can alter your plans for your estate after your life is over, and your living trust won’t amend itself to reflect those changes.
So here are some reasons you may want to revise your living trust, and how to do it.
1. Life and Death and Family
In some cases, you may want to add new people to your living trust: children, grandchildren, nieces, nephews, etc. And in other cases, you may need to remove individuals who have deceased from your plan. Births, adoptions, and deaths can all affect your estate plan, so make sure you account for literal life changes by revising your living trust accordingly.
Changes in your family dynamic may also affect your estate plan. Divorce, children turning 18, and even personal relationships with guardians and trustees can necessitate revise to a living trust.
2. Acquisition and Disposition and Valuation
If you’ve made a substantial acquisition of new assets (like real property, business interests, or investment portfolios) or if you’ve disposed of existing ones through sale or gift, make sure your living trust reflects those changes. Maybe you traded the beach house and bought a houseboat; or your sold your stake in the family business; or finally picked out the perfect plot for your cabin in the woods — any of these would require an update to a living trust.
Additionally, any significant increases or decrease in the valuation of your estate should be taken into account. And you should consider revising your living trust prior to taking distributions from an IRA, 401(k), or another qualified plan.
3. Estates and States and Statutes
Finally, you’ll want to keep an eye out and see whether your state has enacted new laws that might impact your estate planning documents. Also, state wills and probate laws can vary, so if you move to a different state, don’t assume that the living trust created in your previous state conforms to the requirements of your new state.
The best way to know if and when you need to revise a living trust is to consult with an experienced trusts attorney in your area.