[Living Trust] I have created a trust. Do I need to update it separately?
Yes, absolutely. Life is filled with both expected and unexpected changes, and it's crucial to ensure that your estate plan continues to reflect your current situation. Over time, circumstances evolve, and it may become necessary to regularly update your estate planning documents to ensure that they continue to achieve your intended goals.
Several life events may necessitate revising your will, trust, power of attorney, or healthcare directives. Here are five key situations in which you might need to update your estate plan:
Changes in Marital Status: Marriage, divorce, or the death of a spouse are significant life events that can have a direct impact on your estate plan. It’s important to update beneficiary designations and executor appointments accordingly.
Changes in Family Composition: The birth or adoption of a child, changes in your relationship with beneficiaries, or the death of a designated beneficiary may require adjustments to your distribution plan and guardianship appointments.
Changes in Assets: Acquiring or selling significant assets, such as real estate or a business, could affect the structure of your estate plan and have tax implications that require adjustments.
Relocation to Another State: If you move to a different state, it is important to review your living trust documents. Different states have varying laws, and updates may be required to ensure the documents remain valid.
Changes in Preferences: Over time, your priorities about who should inherit your assets, who should make decisions on your behalf, or your preferences regarding end-of-life care may change.
When it comes to updating your estate planning documents, you may need to make relatively minor adjustments. For example, you might need to change a legal guardian or update a beneficiary’s name due to marriage or divorce. In such cases, you can use a Codicil, a legal document that officially amends, supplements, or revokes parts of your original will without replacing it.
A Codicil typically serves the following purposes:
Amendment: Making changes to parts of the will, such as adding or excluding beneficiaries.
Supplementation: Adding new provisions to the will, such as adding conditions or filling in missing details.
Revocation: Canceling specific provisions, such as removing a previously named beneficiary or deleting certain conditions.
While Codicils offer flexibility in making minor changes, they must be drafted with care. Importantly, a Codicil must follow the same legal formalities as the original will. This means it must be executed, signed, and witnessed in accordance with the laws of your state. Failing to follow these procedures can render both the Codicil and the entire will invalid, leading to disputes among heirs and potential legal complications.
In some cases, specific planning may also be necessary to address tax matters or regulatory changes. An experienced estate planning attorney can help you evaluate the potential consequences of changes to your plan, minimizing taxes, avoiding probate issues, and ensuring that you achieve your desired outcomes.
