Reviewing Your Trust

All revocable trusts (as well as your entire estate plan) should be reviewed every few years to make sure that they are up-to-date with changes in the law and continue to meet your goals. Some important things to review include the following:

1. Do you have the right successor trustees?

• • Typically, you will be the trustee of your own revocable trust. If you are married your spouse may be the co-trustee.
  • Review your successor Trustees to make sure that they are still suitable choices.

2. Who can remove trustees?

• • You can always change the trustees of your revocable trust.
  • If you are not able to make the change, who has the right to make changes to the Trustee if necessary?
  • Giving your beneficiaries or someone else, the ability to remove and replace a trustee can often avoid problems if there are communication problems or disagreements with the trustee. On the other hand, you might want to limit this to some extent to make sure a beneficiary is not able to look for a trustee to do whatever they say.

3. Review who receives distributions

• • Make sure that the people or charities that will receive distributions are still consistent with your wishes.

4. At what age will your beneficiaries receive funds from the Trust? 

• • Most trusts provide assets will remain in trust until those inheriting reach a certain age, generally at least until they are over 18.
  • Your trust may provide for any age you choose and even permit a beneficiary to withdraw a portion of the trust at different ages, say half at 25 and half at 30, or a third each at 25, 30 and 35. This doesn’t mean that they can’t benefit from the trust assets in the meantime, but that distribution decisions are made by the trustees until your beneficiaries have more financial experience.
  • Review the ages in your trust and determine if they are still a good fit for your beneficiaries.

5. Does your trust protect your children and grandchildren from lawsuits and divorce?

• • You have the option of drafting your trust to provide creditor and divorce protection for your beneficiaries. If this is a concern for a beneficiary, we should review your trust to make sure that he or she is protected.

6. Have you funded your trust?

• • • If you want assets to pass through your trust, it is important to make sure that assets are “funded” to your trust.
    • Make sure that your assets are either owned by your trust or name the trust as a beneficiary.
    • Bank and brokerage accounts can be payable on death or transfer on death to your trust. This applies to joint accounts as well
    • Life insurance policies should name the trust as the beneficiary.

  Making sure your trust is fully funded is important to avoid probate and make sure your wishes are followed.

7. Is the trust named as a beneficiary of your Retirement Plans?

• • Recent changes in the law impact when a beneficiary must take assets out of a retirement account or IRA and pay taxes on them.
  • Generally, anyone other than a spouse has 10 years to take IRA or retirement account distributions.
  • If your trust is named as a beneficiary, the language in your trust needs to be updated for the new law.

If you have any questions regarding your trust, please contact me. I would be happy to review it with you to determine if any changes are needed.