How to Prepare Your Living Trust for the New Year

How to Prepare Your Living Trust for the New Year

The new year is an ideal time to review and revise your estate planning goals, account for changes to your financial status or your family dynamics. Learn more about the benefits of annual meetings with your living trust attorney.

How to Prepare Your Living Trust for the New Year

The start of a new year is always a great opportunity for personal reflection. It’s a time to set goals for the year to come, whether those are goals related to fitness, weight loss, professional achievement, or personal finance. It’s also a good time to take stock of where you are in your life, particularly with respect to your estate planning.

Hopefully, you already have key estate planning documents in place, including a living trust. But your situation may have changed since you last met with a living trust attorney. For example, you may be in a new place with your finances. Your family dynamics may have been altered. The regulatory or tax environments may be different.

Your living trust should be reviewed and revised regularly in order to accommodate these changes. And the start of a new year is an excellent time to do so. In fact, there are many reasons why now might be the best time to meet with your living trust lawyer.

Understanding Your Living Trust

Before meeting with your living trust attorney, it may be worthwhile to have a quick refresher: What is a living trust, and why should you have one as part of your estate plan?

Living Trusts Explained

A living trust is an important legal document that you can include as part of your estate plan. Much like a will, your living trust can include instructions for how your assets are distributed upon your death. Unlike your will, a living trust allows you to set aside money to be managed by a trustee, who must act in the best interests of the trust itself and of any named beneficiaries. Living trusts offer many benefits, including the ability to avoid the lengthy and expensive probate process.

Living Trust Benefits

A quick summary of the living trust’s benefits include:

  • A living trust allows you to carefully plan for what happens to your assets after you die, ensuring your loved ones are cared for and your personal wealth is preserved.
  • Living trusts allow your beneficiaries to avoid probate, which can be a lengthy, complex, and expensive process.
  • Additionally, because living trusts are not subject to probate court, they allow you to maintain privacy regarding your assets.
  • Living trusts can be modified and actively managed during your lifetime, allowing you to ensure the best outcomes for your beneficiaries.

These are just a few of the reasons to meet with a living trust attorney… but again, to make the most of your living trust, it’s important to keep it up to date.

Reviewing and Revising Your Living Trust

Taking a “set it and forget it” approach to your living trust is not recommended. Instead, take the time to sit down with your living trust lawyer once a year or so, going over the document and modifying it based on any changes to your life.

There are plenty of reasons to modify a living trust, but the most common ones are changes to your financial status, changes to your family status, and changes to estate planning laws.

Assessing Financial Changes

First and foremost, your living trust should reflect the true nature of your financial assets. If your personal wealth undergoes a significant shift, in either direction, your living trust document should reflect that.

Some examples of financial changes that might require a revision to your living trust include:

  • You have either bought or sold a business.
  • You have acquired significant financial assets, including real estate, a major cash inheritance, etc.
  • You have lost considerable financial assets.

You have moved into a different tax bracket.

Your living trust lawyer can help you assess these financial changes and update your estate plan accordingly.

Considering Family Dynamics

Your living trust should also reflect any changes to your family life. These changes can make a material difference with regard to who you do (or do not) wish to be named as a beneficiary. Some examples include:

  • You get married.
  • You get divorced.
  • Your spouse dies.
  • You have a new biological child.
  • You adopt a child.
  • You welcome grandchildren into the world.
  • One of your children gets divorced or loses a spouse.

Any of these changes to your family dynamic may be cause for a living trust revision. Again, your living trust attorney can help.

Staying Informed About Legal Changes

Finally, your estate planning needs may shift due to changes in the law itself. For example, changes to local probate codes or to estate tax provisions may call for an amendment to your living trust. Your living trust attorney can advise you on any relevant changes, and counsel you on how to amend your living trust document.

Setting Goals for the New Year

As you meet with your living trust attorney, you might wish to discuss particular goals you have for the coming year. For example, your living trust lawyer may encourage you to fully fund your trust, or to create ancillary documents such as a pour-over will or an advanced health directive.

The important thing is to remember that your goals will likely change over time, as your financial and family conditions evolve. As such, it’s important to prioritize annual meetings with your living trust attorney, ensuring your estate plan is fully up to date.

Talk with a Living Trust Lawyer in California

The team at OC Trusts Lawyer have decades of experience in living trusts and trust litigation and can help you achieve all your estate planning goals. Schedule a consultation at your convenience.