I was recently asked to write an estate planning article for the Conejo Guardian Newspaper. In case you missed it, here it is!
If you have already set up your living trust – congratulations! Having a living trust can save your loved ones from having to go through a long, costly and public probate and/or conservatorship court proceeding. A living trust and other essential estate planning documents also make your wishes clear, minimizing the potential for hard feelings between family members. These reasons along with others clearly outline the benefit of having a living trust, but don’t let your living trust go stale!
Setting up a living trust is not a one-and-done exercise. You need to make sure that you keep it up to date as your life circumstances change. Six of the automatic triggers for reviewing your living trust are birth, death, marriage, divorce, retirement and relocation. The trustee, who is the manager of your trust assets, may have seen like a good pick years ago, but what about today? Your trustee should be someone you trust (hence “trustee”). After all, they will be taking care of your financial well-being if you become incapacitated and making distributions to your beneficiaries upon your passing.
And what about those beneficiaries (i.e., the people who get your assets)? You may want to change how much a beneficiary is receiving or maybe even how they will inherit your assets. For example, if a beneficiary you named in your trust now has substance abuse issues, a disability or has shown a gross inability to manage their finances, you may want to put someone else in charge of their inheritance and set up rules on what distributions can be made.
Changes in life circumstances are the cause of most updates to living trusts that I see, but changes in the law can also necessitate updates. For example, many living trusts drafted prior to 2012 had special provisions to avoid or substantially reduce estate tax liability. However, estate taxes now only impact individuals with $11.58 million or more in assets, and couples can have double that amount. Unnecessary estate tax savings provisions that aren’t removed from living trusts can cause capital gains taxes and have other negative consequences.
As a rule of thumb, I recommend meeting with your estate planning attorney every three years to review your living trust. Changes in life circumstances and the law can disrupt good planning and it’s sometimes hard for someone who’s not a legal or tax professional to keep up with those changes. If you’re not sure whether your estate plan needs a change, don’t procrastinate having it reviewed. Some estate planning attorneys will even offer complimentary consultations to review your living trust and other estate planning documents.
If you’re at home and have some down time, I invite you to check out my YouTube channel that has numerous videos on California Estate Planning. If there is a topic that you want to learn more about, please let me know and I will add another video!
Here is a link to the Wood Law YouTube channel