It’s very common for people to have an estate plan that includes a revocable living trust. If you have such a living trust and haven’t looked at it in a while, it’s probably a good idea to go back and review it soon.
Taking the time to review the terms of your living trust every several years or so is an excellent idea because, like many estate planning documents, you’ll probably need to update it as time goes on. Here are several situations that should cause you to review, and possibly change, the terms of your trust.
Your financial situation has changed substantially.
Living trusts are designed to allow you to more easily transfer your property to others after you die. Not only can you do this privately through living trust, but your estate will not have to go through the often laborious probate process.
When you created your living trust you had to make sure that you transferred the property you own into the trust’s name. This transfer process doesn’t happen automatically, and depending on the type of property you own, you will have to take different steps to make sure this funding process is completed properly.
So, if you have acquired significant new assets since you first created the trust, you’ll have to go back and make sure that this property is also properly transferred into the trust’s name. This process is usually quite simple, but if you make the mistake and leave something out it can cause significant problems later.
You want to add new beneficiaries to your living trust.
A lot of people create living trusts in anticipation of leaving their children, grandchildren, or other people inheritances. So, needless to say, if you have a child, grandchild, or want to include other people in your list of inheritors, you’ll absolutely want to update the terms of your living trust.
However, if you created a living trust that has inclusive language, this update might not be necessary. For example, if your trust says that the trust property will be divided equally between all of your children, it doesn’t really matter if you have one or more children after you make the trust because they are already accounted for.
You get married or divorced.
If your marriage recently ended or you entered into a new marriage, you’ll absolutely want to update the terms of your trust to reflect this new situation. While spouses have an automatic right to inherit from one another, changing your marital situation will definitely impact how you want to distribute your living trust property. Further, if the divorce decree directed that you and your spouse separate the property owned in the living trust, you will have to re-title the property to reflect that as well.