After an individual executes his or her revocable trust, he or she may think that they do not need to ever review their trust again. However, that is a misconception and can create significant problems either during the individual’s life or after his or her death. As a rule of thumb, I suggest an individual who has a revocable trust reviews the revocable trust with their estate planning attorney every two to five years or at any time that there is a significant change in the individual’s life. These changes include a death in the family, a change in marital status in the family, the birth of a child or grandchild, a change in financial situation for the individual or a relative, or a change in a family or friend relationship.
During this review, the following are a few items which I suggest the trust owner should review:
1. Have you funded your trust with your assets? Even though you have executed a revocable trust, it is critical that you review the titling to all of your assets and determine whether or not a particular asset will either be owned by the trust or if the trust will be the beneficiary. This will allow those assets to avoid probate upon your passing.
2. You should review all of your insurance policies as well as retirement assets to determine who you have listed as the beneficiaries. If your plan is to name a trust as either the primary or contingent beneficiary of these types of assets, then it is important that you make sure that there are certain provisions in your trust which will allow these types of assets to pass to your beneficiaries in the most tax effective way.
3. If you are married and if it is a joint trust, have you allowed for your surviving spouse to change the distribution provisions? In most intact family situations, allowing a spouse to change the beneficiaries after one of the spouses pass away should not be a problem. However, in blended family situations (both spouses have their own children), allowing the surviving spouse this type of power can create unintended results as far as who the ultimate beneficiaries of your trust will be. Therefore, this issue should be reviewed carefully.
4. If your children are ultimate beneficiaries of the trust, then you need to make sure that the dispositive provisions in the trust are authorizing the children to receive their inheritance at your intended time of receipt and exactly how you have intended them to receive it.
5. You should review the individuals who you have named as your trustees and trust protectors in the trust and make a determination that those individuals are, in fact, the individuals who you wish to handle those roles. It is also important that you determine if you are going to allow any individuals to be able to change who these trustees and trust protectors are after you have either become incapacitated or have passed away.
6. As a result of all of the estate tax changes that have occurred at both the federal and state of Ohio levels in the last few years, it is critical that you have your estate planning attorney review your trust to make sure that it is going to accomplish your wishes as it relates to estate taxes.
As you can see, a number of reasons exist to review your trust document in order to make sure that it is consistent with your current wishes. Therefore, please take the time to review the trust with your estate planning attorney to avoid any unintended results after you have passed away.
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.
James F. Contini II, Esq.
Certified Specialist in Estate Planning,
Trust & Probate Law by the OSBA
Krugliak, Wilkins, Griffiths & Dougherty Co., LPA
158 North Broadway
New Philadelphia, Ohio 44663
Phone: (330) 364-3472
Fax: (330) 602-3187