Adapting Your Needs to Life’s Changes
Life changes in the blink of an eye, it seems. What may have been a priority in the past may not be the case today. Therefore, pertinent documents such as your living will may need to be changed. It’s best practice to review your important financial and estate planning documents every few years to ensure accuracy and reflect any critical changes that have occurred in your life.
Common Reasons to Amend Your Trust
Several things can change, and you may need to reflect on your trust. Suppose a beneficiary gets married, and you need to change their legal name within your trust. Or if a birth or adoption happens, you need to add a beneficiary or secondary beneficiary.
Similarly, if a beneficiary currently listed is no longer in the family due to divorce or if someone passes away and you need to select a new beneficiary, this may be a good time to amend your trust.
Another reason to amend a trust is if you need to change the trustee or the successor trustee. Suppose the relationship with your trustee has changed over the years, and you wish to change to a different trustee as a result. You can amend the trust to reflect this change, and you should ensure there’s clear communication with the new trustee so you are on the same page.
Additional Reasons to Amend a Trust
Another reason that you may wish to amend your trust is if you want a revocable trust to become irrevocable. Irrevocable trusts are much more complex to amend, if not nearly impossible, so it’s important to discuss your needs with your estate planning attorney to ensure you are not placing yourself in an unreasonable situation.
An irrevocable trust, however, can have its benefits, one of which is that generally, assets within an irrevocable trust aren’t calculated should you wish to be eligible for benefits later in life, such as Medicaid. Speak with your experienced attorney to understand the best options for your specific needs.
What if you moved to Arizona from another state? Trusts are guided by state laws, and each state may view the trust differently. If you are new to the state, you may wish to amend or restate your current trust to reflect any necessary changes.
What is a Trust Restatement?
If you are in need of simple edits, you may choose to amend your trust. If you have more complex changes or several of them, you may consider a restatement of your trust.
When you create the trust, you fund it with assets by retitling them to reflect its name. If you delete the trust, you would need to review all the assets’ titles and ensure that you have correctly adjusted the titles. This process is not only inconvenient, but you could run into roadblocks, and some of the assets may fall through the cracks as a result.
You can, however, restate your trust and keep the trust verbiage clear and straightforward. Amending the trust is effective, but if many amendments have been made, it can become unclear which is the most current or the ultimate goal of the changes.
To restate a trust is typically a little more expensive than an amendment, but not generally unreasonable in price and allows you to make significant changes as necessary.
When to Restate a Trust
Consider the age of the trust and if the laws regarding that trust have changed. As laws and life evolve, you may have a different set of goals or the ability for more flexibility than you did when it was initially created and wish to make significant changes.
Similarly, having all the relevant documents may be tough to achieve if a trust is older. By amending a trust, you may miss critical pieces of information that would need an update. If you restate the trust, you can ensure that the change is complete and thorough without leaving out important information.
Significant changes such as adding a spouse to the trust or removing a beneficiary from the trust may be a significant enough reason to restate rather than amend.
Should I Revoke a Trust?
In some cases, significant changes may result in your wishes to revoke the trust entirely. Each situation will be different, so consulting your estate planning attorney to determine which is best for you is invaluable before making significant changes.
Suppose you are dissatisfied with the trustee or beneficiaries or have had a complex change in your personal life, such as marriage or divorce. These reasons may be enough to wish to revoke a trust and create a new one. You may consider restatement instead if your situation provides this as a reasonable solution. Your trusted attorney can help you determine which process is best for you.
Planning For a Flexible Future
None of us have a crystal ball, so it’s tough to plan for the future when we aren’t sure what to expect. Life changes or needs change. It’s realistic to make changes that significantly affect your financial future and that of your loved ones.
Whether or not an amendment, restatement, or revocation is in order is going to depend on your specific situation. There is no “cookie cutter” approach to estate planning; it’s customizable for a reason. The good news is that you have already taken the steps to create a trust and plan for your future, so you are essentially ahead of the game. Now, let’s tailor it to reflect your current needs.
Contact our office today at (623) 267-0026 to schedule your consultation and learn more about your options.