Do You Have an Outdated Trust?

Trusts as an estate planning mechanism have been around for many decades.  It is a highly favored method of transferring assets without involvement of probate court, and managing those assets for the benefits of loved ones.

However, the majority of trusts that have been established over the years are considered presently outdated.  This can be for many reasons.  Sometimes, they precede the current tax laws, such as the American Taxpayer Relief Act of 2012.  That law justified significant changes in trust mechanisms.  Others presume that the tax exemption is low, and the plan is tailored for the need for avoidance of estate taxes.  The tax exemption has now increased to $10.98 million for a married couple, or $5.49 million for a single individual.  If your net worth, including insurance, accounts, and assets, falls below that amount, then under current law you would be tax exempt, and there is no present need for tax planning in your estate plan.

Most often, trusts that were created years ago fail to reflect the individual’s current desires.  People who were previously designated as guardians, trustees, or powers of attorney are not the present choices for a person’s life.  The desire to provide for beneficiaries evolves over time, while the documents do not.  Often, not only does the estate plan not reflect current desires, but it does not even reflect what the planner thought it would provide.

So what designs can be put in place to resolve these issues? First, it is important to have annual reviews of your estate planning documents.  This should not be treated as an extensive chore.  Rather, it is simply important to review two things: (1) are the people you have chosen as caretakers/successor trustees still the people you would want; and (2) do the beneficiary provisions still reflect your vision to provide for others upon your passing.  A number of estate planning firms calendar an annual check-in to address these issues.  Attorneys should not charge for such services, unless a need for revision is identified.  Most revisions are easily done, and charges should be fairly minimal.

Further, it is important to be attentive to significant changes in tax law pertaining to your estate planning.  There are law firms that send out periodic newsletters with updates as to tax law and changes in estate planning designs.  Such updates should be easy to review, and simple headline scanning should identify whether there is information for which follow up is warranted.

For anyone who has done their estate planning more than 5 years ago, and has not conducted a review, that should be an immediate priority.  You should consult with your team of professionals, including your attorney, accountant, and financial planner, to make sure your estate planning is in order and appropriately provides for your desires.

For further information or resources, please feel free to review the blogs and materials available at, or contact us at (303) 586-5905.

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