Establishing a trust is one of the best ways an individual can plan for the management and distribution of their assets after death. However, it is important to realize that your trust is based on a snapshot in time, in that it serves your wishes as stated at the time the trust was created. As life goes on, your once “perfect” trust may no longer adequately serve your wishes. Here, we will address the common concern regarding how often a trust should be updated.
Before diving deeper into this question, it is necessary to provide a brief background on nomenclature. When one seeks to make changes to their trust, the changes are recorded via an “amendment.” An amendment typically suffices to make minor changes to the trust, such as the order of successor trustees. When more wholesale changes are required, a “restatement” of trust is more appropriate. Now picture your trust as a suitcase packed and ready for vacation. The bag itself is the name of the trust, and your clothes and other belongings are the various articles stated throughout the document. Following this analogy, if you were to restate your trust, you are keeping the suitcase itself, but swapping out all of the contents you have placed inside of it.
Whether you wish to amend or restate your trust, it imperative first that the trust affords you the authority to make changes to it. It is important to remember that not all trusts are the same. Certain specialized trusts specifically limit your ability, as the trust’s creator, to amend what the document states. If your trust does not provide you the ability to amend or restate the document, then the question of when to update your trust becomes moot.
Assuming your trust is amendable, you should consider when it is a good time to update the trust. This timing question is predicated primarily on major life events. When major life events occur, the goals you had when originally creating your trust may no longer align with your new reality. For example, the birth of a new child or grandchild might cause you to reconsider your current distribution schedule. If your trust is currently drafted to leave everything to your first born, without any subsequent amendments any future children would be cut out. Similarly, the death of a successor trustee might be a good reason to reconsider your succession plan. You want to have someone you trust acting as successor trustee, which is why this is an aspect of your trust that needs to regularly be revisited as your relationships change. Ultimately, if your family dynamic or circumstances have changed since your trust was first created, it is likely time to meet with an attorney to discuss whether your estate plan still accomplishes your goals.
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