Updating Your Plan Part 2: Your Trust or Will

This is the second in a two-part series of articles on updating your plan. This first article examined the importance of updating the Powers of Attorney, both Financial and Medical. This second part of the series looks at the importance of updating your primary estate planning document, such as your trust or will. Together, these documents form the core of even the most basic estate plan and it’s important to keep them up-to-date.

Every state has laws controlling what happens to your assets if you die owning them in your name and don’t leave instructions indicating what you want to happen to those assets. Those laws are called “intestate succession” laws. While they are designed to cover what people will want generally, they often aren’t what you want to happen in your precise situation. For example, state law might leave the assets equally to your children outright. You may prefer unequal shares for your children due to your situation. Also, you may prefer to have the assets held in trust. For example, a beneficiary might have special needs and an outright distribution could deprive them of needs-based benefits. A will is how you leave instructions to override the intestate succession laws. If you have assets in your name at death, they will be subject to probate and will be controlled by your will, if it exists, or intestate succession.

However, you can have your assets owned by a revocable trust. If you do that, your assets won’t be in your name at death and they won’t have to go through the probate process. The probate process may be more or less expensive and time-consuming depending upon the jurisdiction. But, it’s almost always a public process. A revocable trust allows for streamlined management of your assets. While you’re alive and well, typically you’d be the trustee, in other words, the person managing those assets. Upon your incapacity, the person you’ve chosen as your successor trustee would step into that role. This incapacity protection can be invaluable. It’s much easier than if you don’t have a trust holding your assets.

Whether you’ve chosen a will or a trust as the engine of your estate plan, it’s important to re-examine your plan periodically to be sure it’s doing what you want. Are you comfortable with the successor trustees who would take over in the event of your incapacity? Are you comfortable with who would get your money, when, and how?

Many things can happen in the course of a year. This is especially true in a year like this one! It’s good to take a look at your plan and make sure it’s still consistent with your wishes.

As a bonus for this series, the next blog in the series will examine the need to keep your beneficiary designations up-to-date for changes in your circumstances, wealth, and wishes.

Stephen C. Hartnett, J.D., LL.M.
Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com