One of the benefits of a living trust for estate planning is that you can revoke it—meaning, of course, you can change the terms of the trust. For those who are not experienced or otherwise knowledgeable, though, the question might arise: how does one do this?
The first step would be to look at the trust itself and see what it says about revocation. Many trusts contain a provision indicating that the trust may be revoked in writing, signed by the trust creator and delivered to the trustee. When a trust contains a so-called “exclusive method of revocation,” that method must absolutely be followed. Complications can arise in this process, when some party challenges the revocation. It is important to work with an attorney not only to reduce the possibility of such a challenge but also handle the situation when one arises.
There are a variety of reasons why one might want to revoke a term of the trust, or the trust itself. It is recommended that one reviews his or her trust documents periodically, so as to ensure the trust is still serving the purposes for which it is intended. It is particularly important to review trust documents when any significant change takes place with personal or financial circumstances.
Updates to trust documents should also take place when new assets are acquired and when federal tax laws change. Most people don’t pay a lot of attention to when tax laws change, so it is important to work with professionals who do this for a living.
As with any aspect of estate planning strategies, periodic review is critical in ensuring that plans put in place in previous years achieve the planner’s goals. In this sense, estate planning really should be viewed not as a task, but as a process.
Source: Sacramento Bee, “Ask the Experts: When should living trusts be amended or updated?,” July 17, 2013.