Do you have a Revocable Living Trust? If so, here are two important things you should know.
- You’re awesome! Congratulations.
- Your Revocable Living trust may one of the most, if not the most, important parts of your estate plan.
When was the last time you read through your revocable living trust carefully? Has it been years?
When Should You Review or Update Your Revocable Living Trust?
You finally have an estate plan with a revocable living trust. It has been prepared and implemented. It gives you peace of mind knowing the foundational plan is there if something happens to you. Is your planning finished? How often should you review your revocable living trust and when should you update it? Here’s a simple guideline to follow:
Review it Annually:
You really should review your revocable living trust once a year. Set an annual reminder today to do a careful read-through. This doesn’t necessarily mean that you need to involve your attorney. Although you may elect to meet with your attorney to review it with you which will usually be billable. Here are three things to consider when you review it.
3 Things to Look For When Reviewing Your Revocable Living Trust:
- Review Fiduciaries: Who are the fiduciaries (your successor trustees)? Do you still want them to be in that role or would you like to appoint someone else? If you need to make a change, your attorney can help.
- Review Assets: What are your current assets and are they titled appropriately? It’s very important for your assets to be titled properly or for beneficiary designations on life insurance policies and retirement accounts to be correct for your plan to work properly. If assets are not titled properly, you need to make sure to update that. If you have new assets or major changes in the value of certain assets, you may consider contacting your attorney to help advise.
- Review Inheritance Plan (Division of Assets Upon Death): How are the assets divided upon your death? Is it how you want it to happen? Have circumstances changed? Do you want to distribute assets differently or to different beneficiaries? Do you want to change the manner in which the assets are held in trust for beneficiaries or distributed to them? If so, your attorney can help. Sometimes it’s helpful for your attorney to explain why the trust was drafted the way it was or to recommend changes.
Review With Your Attorney (every 1-3 years):
Revocable living trusts are sort of like your car. They require periodic maintenance and occasionally need new tires or a transmission tune up. Trusts don’t commonly need updating every year, but it’s a good idea to keep an eye on them. It’s a good idea to meet with your attorney (your trust mechanic) every so often, to review your trust and consider changes. Your attorney will review the same 3 things I mentioned above and will also consider any changes in laws or tax implications which you should consider and how they affect your planning. Sometimes you’ll meet with your attorney for a review and find that everything is great and that you don’t need any changes or updates. Other times there may be some changes to implement. Often the changes are driven by you because you want to change fiduciaries or how assets are to be divided.
The simple act of reviewing your revocable living trust periodically could save you a lot of trouble now and down the road.