TOJI LAW, APC
ESTATE PLANNING FOR THE GENERATIONS
TRUST AMENDMENTS
If you have already created your Revocable Living Trust (RLT), then you’ve taken the first step to establish a solid Estate Plan. What you may not realize, however, is that the first step isn’t necessarily the last step.
One of the primary features of the RLT is that it is, by its very nature, revocable. You can revoke, restate (i.e., start from scratch), or amend it at any time as long as you have the capacity to do so.
This type of flexibility is comforting because as we all know, change is inevitable. As your life evolves, so should your Trust. To see if your RLT could potentially benefit from a Trust Amendment, consider the following:
FAMILY DYNAMICS
Over the years, changes within your family may warrant an update to your RLT.
If you have grandchildren now, you may want to include them as beneficiaries.
If your sister was your Successor Trustee and she has since passed away, you should remove her as your Successor Trustee and add someone else in her place – perhaps your adult children, who are now capable of that responsibility.
If your daughter has gotten divorced, you may want to make sure her ex-husband has no right to your assets.
When you create a Trust Amendment, you are changing a specific part of your Trust - such as a beneficiary - while leaving everything else untouched.
A-B PROVISIONS
If you and your spouse created your Trust 10+ years ago, you may have an outdated provision that can leave you with a loss of control over your assets, extensive record keeping, additional filing of tax returns, and other negative tax implications.
This "A-B Trust" provision was historically used to reduce estate taxes, but dramatic changes in the law altered the way this provision is currently drafted.
Rectifying this issue is simple. All you have to do is amend the Trust to remove the old, mandatory language and replace it with the new, discretionary language.
The only catch is that the modification must be done while both spouses are alive; once one spouse passes away, it is likely that the provision cannot be changed.
LAW CHANGES
Each year, Congress passes new laws and the IRS issues new regulations. Trust provisions are constantly re-drafted to keep up with these changes. (The "A-B Trust" provision is a classic example.) It’s helpful to review your RLT and the rest of your Estate Plan with your attorney every 5-10 years in order to avoid unintended results.