Creating a trust is a powerful way to protect your assets and ensure your loved ones are taken care of when you’re gone. But simply having a trust isn’t enough – you need to review and update it regularly to make sure it still aligns with your life, financial situation, and current laws. Your estate plan should evolve as your circumstances change so that it continues to work exactly as you intend.
Many people think of their estate plan as a “one-and-done” task. But the truth is, life changes, laws change, and your trust should, too. If you don’t keep it updated, your assets may not go to the right people, your loved ones may face unnecessary legal battles, and your trust may not even work the way you expected.
Let’s explore why regular trust reviews are essential and how often you should check in on your plan.
Your Life Changes – Your Trust Should Too
Life doesn’t stand still, and neither should your estate plan. Since creating your trust, you’ve likely experienced personal or financial changes that could affect how your trust functions. Some key life events that should trigger an immediate review include:
- Marriage, divorce, or the loss of a spouse – You may need to update your beneficiaries or trustees.
- Birth or adoption of a child or grandchild – If you want to include them in your trust, you need to update it accordingly.
- Death of a named trustee, guardian, or beneficiary – If someone listed in your trust has passed away, you need to revise your plan.
- Significant financial changes – Acquiring new assets, starting a business, or receiving an inheritance may require adjustments to your trust.
- Moving to a new state – Trust laws vary by state, and your plan may need to be revised to comply with local regulations.
Failing to update your trust when these events occur can lead to unintended consequences. Without proper updates, assets might end up in probate, family members may not receive the inheritance you intended, or someone you no longer trust could still be listed as a decision-maker.
Laws Change, Even When Your Wishes Don’t
Even if your personal situation hasn’t changed, tax and estate laws frequently do. Changes in the law could impact how your trust functions, what taxes your beneficiaries may face, or how assets are distributed.
For example, federal estate tax laws have shifted significantly over the years, and they may change again in the future. If your trust was created under old laws, it might contain outdated provisions that no longer serve your best interests. State laws governing trusts and probate also change regularly, so staying up to date is crucial to ensure your plan remains valid and effective.
Regular reviews allow you to take advantage of new legal benefits and avoid unintended pitfalls.
The Risks of an Outdated Trust
An outdated trust can create serious problems for you and your loved ones. Some of the biggest risks include:
- Probate and legal complications – If new assets aren’t properly added to your trust, they may go through probate, delaying inheritance and adding unnecessary costs.
- Assets going to the wrong beneficiaries – If you haven’t updated your trust after a major life event, your assets could end up in the wrong hands.
- Family disputes – An unclear or outdated trust can cause conflict among family members, leading to costly and emotional legal battles.
- Unnecessary taxes – Changes in tax laws could mean your trust is no longer structured in the most tax-efficient way, potentially leaving your heirs with a higher tax burden than necessary.
Regular trust reviews help prevent these issues, ensuring your estate plan continues to protect your legacy and loved ones.
How Often Should You Review Your Trust?
A good rule of thumb is to review your trust every three to five years. Even if you don’t think anything has changed, this ensures you’re not overlooking gradual shifts in your life, finances, or the law.
However, you should review and update your trust immediately if any of the following occur:
- Marriage, divorce, or the death of a spouse
- Birth or adoption of a child or grandchild
- Death or incapacity of a named trustee or beneficiary
- Significant changes in your financial situation
- Relocating to another state
- Major tax or estate law changes
A proactive approach helps ensure your trust works exactly as you intended, sparing your loved ones from unnecessary legal issues.
Don’t Leave Your Family’s Future to Chance
Your trust is more than just a legal document – it’s a reflection of your care for your loved ones. Regularly reviewing and updating your trust is one of the most important things you can do to protect them from confusion, conflict, and financial hardship.
At Cheever Law, APC, we don’t just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love, starting with a valuable and educational Life & Legacy Planning Session. This will allow you to get more financially organized and make the best choices for the people you love. If you have already completed your estate plan, we will review that plan at your Life & Legacy Planning Session to ensure that it will work the way you intend and address any holes or gaps that may be present if circumstances have changed since you executed your plan.
To learn more about our one-of-a-kind systems and services, contact us or schedule a no-obligation 15-minute introductory phone call today.