Is It Time to Review Your Trust Agreement?
Trust agreements play a crucial role in many comprehensive estate plans giving the versatile and flexible nature of a trust. If you have a trust agreement in place, it is important to update it periodically to ensure it continues to meet your needs. While it is always best to work closely with an experienced estate planning attorney, the Indianapolis attorneys at Frank & Kraft explain common reasons to review a trust agreement.
Routine Updates
Conducting regular reviews with your estate planning attorney helps keep your trust agreement current and effective. There is no strict rule on how often to review, but most estate planning attorneys suggest every three to five years for most trusts. During these reviews, you can assess whether the trust still aligns with your goals and make any necessary adjustments to reflect changes in your life or financial situation.
Marriage
Marrying typically involves updating your estate plan to include your new spouse. This could mean changing beneficiary designations and appointing your spouse as a Trustee. Additionally, if an adult child marries, you may want to review your trust agreement due to the new legal interests involved. Ensuring that your new spouse is properly included and protected within your estate plan is essential for maintaining harmony and fulfilling your marital obligations.
Divorce
After a divorce, it is crucial to update your estate plan. Overlooking this could result in your ex-spouse remaining as a Trustee or beneficiary of your trust. Updating your trust agreement post-divorce ensures that your assets are distributed according to your new wishes and prevents unintended beneficiaries from receiving your estate.
Birth and Death
The death of a beneficiary, Trustee, or successor Trustee should prompt a review of your plan. Likewise, the birth of a new child or grandchild should be reflected in your trust agreement, even if general provisions for “children” or “grandchildren” are in place. These updates ensure that your loved ones are properly accounted for and that your wishes are clearly documented.
Children Reaching Adulthood
When your children become legal adults, you might choose to gift assets directly to them, necessitating changes to your trust agreement. As adults, your children can manage their inheritance without the need for a guardian or Trustee, allowing you to simplify your estate plan and possibly reduce administrative costs.
Changes to Trust Assets
Significant changes in the value or composition of trust assets require revisions to your trust agreement. Whether you have acquired substantial new assets or experienced a significant change in the value of existing ones, updating your trust ensures that your estate plan accurately reflects your current financial situation and intentions
Retirement
Withdrawing from retirement accounts or selling major assets upon retirement can impact your trust. Consider adding a Medicaid planning component, including a Medicaid trust, to protect your assets and qualify for benefits if needed. Retirement often brings significant lifestyle changes, making it a critical time to reassess and update your estate plan.
Serious Illness
If diagnosed with a serious illness, reviewing your trust ensures it aligns with your current circumstances, particularly if it includes a revocable trust for incapacity planning. Making necessary updates can provide peace of mind and ensure that your wishes are honored should you become incapacitated.
Legal Changes
Alterations in the law can affect your trust agreement. For instance, the recognition of asset protection trusts varies by state. Staying informed about legal changes and updating your trust accordingly ensures compliance and maximizes the protection of your assets.
Relocation
Moving to a different state or country necessitates a review to ensure your trust complies with the new jurisdiction’s laws. Trust and estate laws can vary significantly, so it is important to adjust your trust to meet the requirements and take advantage of the benefits offered by your new location.
Do You Need Help Conducting a Review of Your Trust Agreement?
For more information, please join us for an upcoming FREE seminar. If you need to review an existing trust agreement, contact an experienced Indianapolis estate planning attorney at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
Paul Kraft is Co-Founder and the senior Principal of Frank & Kraft, one of the leading law firms in Indiana in the area of estate planning as well as business and tax planning.Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.Read More! Latest posts by Paul A. Kraft, Estate Planning Attorney (see all)
