If you’ve created a revocable living trust, you shouldn’t make the mistake of ignoring it once it’s finished. A good estate plan is a living estate plan, and one that you need to care for just as you would anything else that needs regular attention.
Our lives change. Sometimes they change for the better, sometimes for the worse, but they are never the same from day to day. Of course, your living trust isn’t something you need to update all the time. It’s a fairly flexible document, but that flexibility has its limits. While you can create a trust that might anticipate certain types of future events, you still need to change your trust when events warrant.
Let’s take a little time to review some of the main life events that can happen to you that might require you to update your living trust.
You have a child.
If you are single, childless, and have property in a living trust, you typically need to change the terms of your trust if you have a child. Inheritance laws differ from state to state, but a revocable living trust is primarily an instrument through which you get to choose how you want to leave your inheritances. These trusts give you the ability to make these decisions privately and to avoid the probate process.
Your inheritance picture changes when you have a child. Most people who have children want to ensure that they leave adequate inheritances. If you have placed your property in the trust, you’ll need to update the trust terms so that the successor trustee can distribute trust property to your child as you direct.
You get married.
Even if you don’t have a child, any change in your marital status should also prompt you to review and update your living trust. People getting married usually co-mingle their property. In California, couples who get married often join their property together. If you or your spouse already have a living trust, you will need to go back and review that trust to take into consideration your new marital status.
Additionally, if your marriage ends in a divorce or annulment, you’ll also need to revise your trust. Depending on the terms of your divorce and whether or not there was a prenuptial agreement involved, you might have to revoke the trust and create a new trust instrument.
Experiencing a significant change in your finances, as well as making new decisions about the direction you want your life to take, can also prompt you to update your trust. In general, it’s good to review your trust every year or so. Call your estate planning attorney if you have any questions about when trust modification is appropriate.
We regularly assist new and existing clients to update their estate plans.
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