We frequently mention how flexible revocable living trusts are as an estate planning tool.
But there are times when you may need to amend your revocable trust, and there is one situation when you should revoke it altogether.
A revocable living trust (herein referred to simply as a “trust” or “revocable trust”) is a legal document that you create and then fund with money and/or other property. The purpose of the trust is to manage your assets during your lifetime and then distribute them to your heirs when you die. What we love about revocable trusts is that they help you to avoid probate and they are very flexible estate planning tools.
While you may have heard this before, you may not realize that generally, you can change the terms of a revocable trust at any time.
And, as long as you remain in good mental health and are not incapacitated, you may also revoke your trust at any time.
Which brings us to the point of today’s post: there are times in your life when you should consider amending your trust or revoking it altogether.
Below we will present 3 situations when you should amend your revocable trust, and 1 when you should revoke it altogether.
Bear in mind that these are only 3 examples of when you may want to amend or revoke your trust. There are other life changes that can arise when it may be prudent to amend or revoke your trust, so it is important to always consult with an experienced probate attorney.
3 Situations When You Should Amend Your Revocable Trust
- You move to a state that has different inheritance or marital property laws.
Moving is a significant change in your life. Moving to a new state that has different inheritance or marital property laws than the state you are moving from, should set off estate planning alarm bells.
While your trust or Last Will and Testament (“Will”) won’t necessarily be invalid in a new state, you should definitely have your estate planning documents reviewed by an experienced probate lawyer in the new state when you move. This is because each state in the nation has its own rules when it comes to estate planning.
For example, unlike many states, Florida is not a community property state.
This fact can make a significant difference in your estate planning if you move from a community property state to Florida.
In community property states, all property earned or acquired by either spouse during the marriage is owned in equal halves by each spouse. A few exceptions do apply here, but basically, each spouse owns a one-half equal share of everything.
That is not the case in common law property states. In those states, unless a spouse chooses to share his/her money or property with his/her spouse, the one who earns or acquires the property gets to keep it.
What this means, then, is that if you move from a common law state to a community property state, how you hold property as a spouse may change. This change in marital property ownership laws can directly affect what each spouse is considered to own at death.
The same thing applies to inheritance laws that vary from state to state. So, moving to a state with different inheritance or marital property laws calls for a review of your trust to ascertain whether you should amend its terms.
- Your Trustee or Substitute Trustee is No Longer Alive or a Good Fit.
Depending on when you created your trust, years may have passed. And in that time, things change. People change. They move away, get sick, or die.
If you named a trustee or substitute trustee to manage your trust a number of years ago and that person is no longer available or a good fit as trustee of your trust, you should amend your trust and appoint someone else.
- Your Children Have Grown Up.
Very often the motivation for creating a trust in the first place is to protect your young children in the event of your death. However, as the years pass, kids grow up. And trust provisions that may once have made sense, for example, providing distributions when a child reaches the age of 18, may no longer apply.
If your children are now adults, you may want to consider amending your trust to take that into account as well as potential marriages and divorces and/or creditor situations that may apply to them.
The 1 Situation When You Should Revoke Your Trust Altogether.
- Divorce
Divorce creates a lot of financial as well as emotional turmoil. If you have a revocable trust and you get divorced, this may be the time to revoke the trust.
In Florida, the law protects former spouses from complete disinheritance. If you get divorced and do not revoke your trust, your ex-spouse is treated as if he or she predeceased you. This may or may not be what you want, so, before that happens, consult an experienced Florida probate attorney.
Protecting Your Family is Just a Phone Call Away.
Don’t leave planning for your future and that of your loved ones to chance. All it takes is one phone call to SJF Law Group to ensure that your wishes will be followed, and your loved ones taken care of when you are gone. We expertly guide individuals through the complex probate process, and capably handle all aspects of the creation, administration, and settlement of trusts as well. When you work with the estate planning attorneys at SJF Law Group, you get more than just an estate plan: you get peace of mind. Call us at 954-580-3690 or email us at: info@estateandprobatelawyer.com today.