Many of the clients I meet with already have a will, trust, and power of attorney. Some have had their plans in place since the 90’s or earlier, while others set up their plan only five or ten years ago.
Clients often come back to review their estate planning documents, and are encouraged to do so. I like to review an estate plan every five years. Often times, family circumstances have changed and it is important to revisit the plan to ensure it continues to make sense. A beneficiary may have outstanding issues with creditors, and it may be possible to protect their inheritance in trust. Perhaps you made your plan before you had grandchildren, and now you want to leave something for your grandchildren. Or, maybe someone who was named in your documents, either in a fiduciary capacity–such as a trustee–or as a beneficiary, has passed away since you signed your documents. So in addition to reviewing your plan every five years, clients should contact their attorney to review the existing plan when there is a birth, death, marriage, divorce, or other similar milestone.
A client review is also important in light of the constantly changing tax laws and exemption amounts. It is important to review your estate plan to determine if the tax planning is still viable. This is especially critical if the value of your estate has significantly changed since you last met with your attorney. If you recently lost your spouse, it is highly recommended that you consult with an estate planning attorney to review the documents and implement any tax planning that was intended to take effect at your spouse’s death.
Another common question I hear during client reviews is who should serve as the trustee. During your lifetime, you will typically serve as trustee of your own revocable trust. However, the trust allows you to designate a successor, or back up trustee, who will step up and act in the event you are unable to act, if you are incapacitated, or upon your death. A family member is a common choice. Because the trustee will administer the trust, handle distributions, and control the trust assets, it is important to only name someone who you trust. If you have any hesitation about this person’s trustworthiness, they are not the appropriate choice to serve as your trustee.
Age should be a consideration as well. It may not make sense to appoint a trustee who is significantly older than you, and may not outlive you. This would negate the purpose of designating a successor to act as your backup. For clients who are uncomfortable delegating this responsibility to a family member or don’t have someone that is suitable for the job, a corporate trustee can be named instead. A corporate trustee will receive compensation for their services; however, the corporate trustee would only get paid when they take over as trustee. While a corporate trustee provides objectivity, a trustee who is familiar with your family dynamics may be preferable for some clients.
An estate planning attorney can review your existing documents and discuss your options if updates need to be made to the beneficiaries, trustees, or distribution pattern in your will or trust.
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