Yes, even after a trust is established, it’s not a ‘set it and forget it’ situation; regular maintenance is crucial to ensure it continues to function as intended and remains aligned with your evolving circumstances and the law.
What happens if I don’t update my trust?
Many people believe that creating a trust is the final step, but that’s a common misconception. Approximately 60% of Americans do not have an updated estate plan, and this lack of maintenance can lead to significant issues. Without periodic review, your trust might not reflect changes in your family situation – such as births, deaths, marriages, or divorces – or changes in the tax laws. For example, the federal estate tax exemption has fluctuated considerably in recent years; in 2023, it was $12.92 million per individual, but is slated to be halved in 2026. Failing to adjust your trust to take advantage of these changes, or to account for shifts in asset values, could result in unnecessary taxes or complications for your beneficiaries. “A trust is a living document; it needs to breathe and adapt,” as Ted Cook often tells his clients.
How often should I review my trust documents?
At a minimum, you should review your trust documents every three to five years, but ideally annually. This isn’t necessarily a DIY project; Ted Cook recommends scheduling a consultation with an estate planning attorney to review the documents and discuss any necessary changes. Consider life events like a child reaching the age of majority, the purchase or sale of a significant asset (like a business or real estate), or a change in your marital status as triggers for a review.
- Review beneficiary designations.
- Assess asset values and titling.
- Check for outdated tax laws.
I thought trusts were just for the wealthy, is maintenance still needed for a simpler trust?
That’s a common belief, but trusts are beneficial for individuals of all wealth levels. Even a relatively simple trust designed to avoid probate still requires occasional maintenance. I recall a client, Mr. Henderson, who created a trust years ago but never revisited it. After his passing, his daughter discovered that the trust instructions were based on outdated account information and a previously sold property. This resulted in a prolonged and costly legal battle to determine how his assets should be distributed. It turned out he had forgotten to update the trust when he sold his beach home and opened a new investment account.
This is a prime example of how even a seemingly minor oversight can create significant problems for your loved ones.
What does a successful trust maintenance look like?
I once worked with a family, the Millers, who proactively scheduled an annual trust review with our firm. During one such review, we discovered that their daughter, now a young adult, was about to inherit a substantial sum of money at age 25, which they feared she wasn’t prepared to manage responsibly. We amended the trust to create a staggered distribution schedule, releasing funds at specific milestones, like completing her education or achieving financial stability.
This proactive approach ensured that their daughter received the inheritance in a way that would benefit her long-term and aligned with their values. Following these best practices, it’s about more than just legal compliance, it’s about ensuring your wishes are carried out effectively and protecting your loved ones from unnecessary hardship.
“Peace of mind comes from knowing your affairs are in order and your family is protected,”
Ted Cook often emphasizes to his clients.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
(619) 550-7437
Map To Point Loma Estate Planning Law, APC, an estate planning lawyer near me: https://maps.app.goo.gl/JiHkjNg9VFGA44tf9
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