Update your plan: your trust or your will

This is the second article in a two-part series of articles on updating your plan. This first article dealt with the importance of updating financial and medical powers of attorney. This second part of the series examines the importance of updating a basic property planning document, such as your trust or will. Together, these documents form the core of your basic estate plan and it is important to keep it up to date.

Every state has laws that control what happens to your assets if you die while you have them in your name and don’t leave instructions indicating what you want those assets to happen. These laws are called “intestate succession” laws. Although they are designed to cover what people generally want, they often don’t want to happen in your specific situation. For example, state law may leave assets entirely equal to your children. You may prefer unequal shares for your children because of your condition. Also, you may prefer to keep the assets in trust. For example, a beneficiary may have special needs and direct distribution may deprive him of needs-based benefits. A will is how you leave instructions to bypass the laws of non-will inheritance. If you have assets in your name upon death, you will be subject to probate and your will, if any, or intestate succession will control.

However, your assets can be owned by a revocable trust. If you do this, your assets will no longer be in your name at death and they will not have to go through a process of validating your wills. The probate process can be more or less expensive and time consuming depending on the jurisdiction. But it is almost always a general process. A revocable trust allows simplified management of your assets. When you are alive and well, you are usually the trustee, in other words, the person who manages those assets. When you are incapacitated, the person you have chosen to be your successor guardian will take over this role. This disability protection can be invaluable. It’s much easier than if you don’t have a trust owning your assets.

Whether you choose a will or trust as the driver of your estate plan, it is important to recheck your plan periodically to make sure it does what you want. Are you comfortable with the trustees who will succeed you and who will take over your duties in the event of your incapacity? Are you comfortable with who will get your money, when and how?

Many things can happen in a year. This is especially true in a year like this one! It’s a good idea to take a look at your plan and make sure it still aligns with your desires.

As a bonus to this series, the next blog in the series will examine the need to constantly update your beneficiary assignments to changes in your circumstances, wealth, and desires.

Stephen C. Hartnett, JD, LLM
Education Manager
American Academy of Estate Planning Lawyers, Inc.
9444 Balboa Street, Suite 300
San Diego, CA 92123
Phone: (858) 453-2128

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