Trusted Law Corporation conducted a survey of Bay Area homeowners about Estate Planning. Fortunately, the majority of people believe that Estate Planning offers a wide range of benefits to families, from protecting your heirs to keeping family affairs private. Despite this recognition, however, most people also acknowledged that they either have no coverage or that their coverage is outdated. We’ve highlighted the merits of having an Estate Plan in other material, so this article will focus on the second significant estate planning risk, not keeping your Estate Plan updated over time.
New flash, the courts don’t know you, your family or intentions. All they can do is follow the instructions you leave behind or apply standardized probate rules to your estate. The reason for this is simple, the role of the court is to help ensure the legal transfer of money between citizens and to enforce legal instructions you leave behind. Their job is not to determine what someone should have wanted to do with their property. This makes the instructions you leave behind highly important, but there is a problem. Your situation and values change over time. The idea that a Trust originally crafted in your 30s will still be relevant when you’re in your 60s is unrealistic.
In this article, we provide guidance on some big ‘whens’ and ‘whys’ of amending your trust. These are by no means absolute, and there are numerous other reasons to amend your plan over time. Regardless, whether you’re a Trusted client or are working with another Estate Planning firm, we hope these guidelines provide a helpful reminder when you may wish to contact your estate planning attorney.
Change in Financial Situation
If we are fortunate our financial situation will improve over time, but it will almost certainly change. Career advancement, investments, purchases, caring for your family, and retirement all have material impacts on your wealth. When Trusted builds an Estate Plan, we anticipate the future, but generally, encourage people to create a plan organized around your current situation. As your wealth changes changing the trust structure you choose or specific instructions it contains may be merited. You may wish to add new beneficiaries, provide assets to charitable organizations, establish education or home down payment provisions, or adjust the method and timing of disbursements to your heirs. Since the primary function of an estate plan is to define how your property will be disbursed when you’re gone, discuss large changes in wealth with your Estate Planning attorney.
Most people naturally understand why the protections you put in place for your seven-year-old son will differ from those you choose when he turns 30. Children growing up and no longer needing guardianship is one of the most common reasons people edit their Estate Plan, but it is by no means is the only one. Other common causes include children getting married, having kids, achieving financial independence, or running into problems like drug dependence or financial troubles. The rule of thumb here is straightforward if your children have had significant life changes since you last updated your Estate Plan it may be time to check in with your attorney so you can better align the protections you've set with your children's lives.
Health Concerns or Protection
When it comes to our health, we generally hope for the best and deal with the worst. But when it comes to defining the provisions in your plan, it is important to be timely and realistic. If either you or an heir has significant changes to their health, it is worth letting your attorney know. They may recommend changing your plan in a variety of ways including defining financial carveouts for a person with long-term care needs, adding specific care instructions for your guardians, amending your disbursement strategy, changing your Power of Attorney, or providing new end of life choices.
Moving to a New State
Unlike the other reasons in this list which can change slowly over time, moving to a new state is pretty quick and clear. If you have an Estate Plan in place and move to a different state, check with your attorney about whether you need to have your estate plan rewritten. Estate Plans are usually governed by the State laws from the state in which you reside. If your plan is not written correctly for your state of residence, your estate may be forced to go through probate, negating the financial and emotional benefits of having an Estate Plan in the first place.
Switching Chosen Agents
Some Estate Plan changes are caused by the lives of the agents you’ve chosen to look after your affairs. Just like you, they have complex and changing lives and some changes in their lives may prevent them from being your best choice. You may have chosen guardians who get divorced or change where they live. Your Trustee may have run into recent financial trouble or have grown distant from your family. Regardless, if you have an estate plan in place, be sure to check-in with your trustee, guardian and other chosen agents on an annual basis to keep tabs of any changes impacting their lives and contact your attorney if you have concerns about their ability to still perform if needed.
New in Goals / Preferences
The last reason is the most personal. We are all complex, evolving human beings. The things we value today will change over time including who and what we wish to protect and how. Since Estate Planning offers a unique way for people to define their legacies after they're gone, it is natural to think that you may want to change your decisions as your worldview shifts. Since preferences can be fickle, we recommend doing a check in with your trust attorney about every five years to be sure your Estate Plan still lines up with your intentions.