Tuesday, February 02, 2010

Updating Your Estate Plan

Many years ago, you finally fulfilled your long-time resolution and had your Estate Planning completed by signing a Living Trust, a Will, a Power of Attorney, an Advance Health Care Directive, and other related documents.  It was so long ago that you don’t remember the exact choices you made with respect to the plan.  When you look at it, you’re not sure what it says because of the complex “legalese” that lawyers like to use.  How do you know if it needs to be updated?

If it has been several years since you completed your Estate Plan, it is a good idea to have an attorney review it to makes sure that it is up-to-date.  One of the first issues I address when clients bring in existing Estate Plans is whether or not their Trusts are fully funded.  A Trust will only control those assets that are titled to it.  Your Trust can have the most beautiful, detailed language possible but if your assets are not properly titled to your Trust, it’s as if you never did Estate Planning in the first place.

Another key factor in reviewing existing Estate Plans is to make sure that you are still happy with your nominations for Successor Trustees, Power of Attorney Agents, and Advance Health Care Directive Agents.  What seemed like a good nomination years ago might not be a good nomination today.

You also want to think about whether your family circumstances have changed.  Has there been a birth or a death in the family?  Have any of your beneficiaries developed special needs?  Do any of your beneficiaries have creditor problems or are they facing a divorce?  Amended provisions can address these issues.

Tax laws – such as the 2010 Estate Tax and Capital Gains Tax laws – and other laws may have altered since you signed your Estate Plan.

If your changes are relatively small, you can update your Trust by executing an Amendment, a 1-3 page document changing only specific paragraphs.  This is analogous to changing spark plugs in a car.  If more than a few paragraphs need to be changed or if you already have several Amendments, then a “full body restoration” might be in order and you might want to sign a Restatement.  A Restatement amends your Trust in its entirety but keeps the same name and date so that your existing funding doesn’t have to change.