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Do You Trust Your Trust?

Another way of saying this is: How often do you need to have your revocable living trust reviewed after you set it up? Alternatively, what are some triggering events that might cause you to have your trust reviewed? In general, the answer varies depending on the complexity of your estate and other factors in your family. However, I generally tell my clients that it is a good idea to have your estate plan reviewed every three to five years. For larger estates, this time frame gets shortened up to every one to two years, and, for smaller estates, it may be possible to do the reviews at longer intervals. Of course, I also tell my clients that this assumes that there are no changes in your family situation “on your end” and no significant legal changes “on my end”.

What Are Changes That Might Occur on “Your” End?

There are several changes that might occur in your family that would prompt you to make changes to your trust. First, one of the key people in your documents (maybe the person you named as your trustee or your agent under your durable general power of attorney) passes away or becomes incapacitated. Obviously, if the person that you were expecting to be in charge of your estate can no longer serve in this position, you will need to make some changes to your documents. Second, when someone gets divorced or remarries, they usually want to make changes to these documents. Third, sometimes over time, people develop different ideas about their distribution provisions. These changes are prompted by the birth of a grandchild, the behavior (or lack thereof) of some of their children, the death or incapacity of a child, their recent involvement in their church or a favorite charity. Finally, there are endless other reasons too, which are all specific to changes in your family situation.

What Are Legal Changes That Might Occur on “My” End?

On my “end”, various legal changes also occur over time. For instance, there may be a significant tax law change that impacts the planning that I do for my clients. In December 2017, there was a huge tax law change that affected almost everyone in America. For estate taxes, the estate tax exemption is now $11.18 million per person in the United States, meaning that, generally speaking, you can pass away with up to $11.18 million in your estate without having to pay any estate tax. This amount doubles to $22.36 million for married couples, and it goes up each year with a cost of living adjustment. On December 31, 2025, this increase sunsets and goes back to the old estate tax exemption of $5 million per person, adjusted for inflation. This tax law change has caused me to reach out to all of my clients who have A/B Trusts or QTIP Trusts (i.e., trusts that divide into more than one trust after the first spouse passes away) to let them know that there are significant reasons to change the type of trust that they have to a simple trust that does not split into two trusts at the first spouse’s death or to another type of trust that does not have as many adverse tax consequences.

In addition, occasionally, Arizona laws change too. One such change that impacts all of my clients is the enactment of the mental health care power of attorney statutes in Arizona a few years ago. Now, the typical health care power of attorney will not cover things such as Altzheimer’s or dementia without specific language if mental health care treatment (including placement) is ever needed in the future. As a result, I have recommended to all of my clients that they do a mental health care power of attorney as well as their wills, trusts, and other powers of attorney.

Finally, one other change in the law that has affected almost all of my documents is the Health Insurance Portability and Accountability Act of 1996 (aka HIPAA) laws. HIPAA laws are intended to protect the privacy of your health care information. However, HIPAA authorization language has “crept” into all of my health care documents, trusts, and durable general powers of attorney, because health care information is almost always necessary to make a determination about someone’s incapacity.

A Couple of Other Things to Keep in Mind . . .

With all that said, here are a couple of other things to keep in mind when you are deciding whether it is time to have your documents reviewed:

  1. Don’t try to do the changes yourself.  I have had some clients attempt to make changes to the documents themselves. This can have disastrous results. For one, depending on how much you mark up a document, the “mark-ups” could have the effect of voiding the document entirely. Second, if a separate document is done to amend the first document, it will not be valid unless the correct formalities are followed as far as signatures by witnesses and a notary public. Therefore, you may think that you have amended your trust, but, if it is not executed correctly, it will have no legal effect. The bottom line here is to make sure to go with a trusted estate planning attorney to draft the changes for you.
  2. If your trust was done in another state and you are moving to Arizona permanently, then I recommend that you have your documents reviewed by an Arizona attorney as soon as possible.  I see it happen all the time. A couple moves here from the Midwest to retire, because of a job relocation, or to be near the grandchildren. They had their trust done in the 1980’s when their children were minors, they move to Arizona, and they come see me and ask me if their trust is still valid. The short answer is, if the trust was validly executed under Michigan law (or any other state’s law), then it is valid in Arizona. However, I also tell people that, if you are planning to live here permanently, then I recommend that you update your documents to comply with Arizona law because everyone here is much more familiar with Arizona documents and it will be easier to administer these documents when they are needed. In addition, if it has been 30+ years since you updated your estate planning documents, you probably need to revise them anyway.
  3. If you move from Arizona to another state permanently, then I recommend that you have your documents reviewed by an attorney in the other state as soon as possible.  Under the same rationale, if one of my clients with a trust moves to California, then I recommend that they have their trust and all of their other estate planning documents reviewed by a California attorney as soon as possible after they move there.

Need help? Please call me today – 602.663.9263

John EvenOur firm has helped hundreds of families just like yours handle a wide variety of estate planning, business planning, probate, trust, and elder law issues. When families or business owners are not getting along, we can also handle any disputes and litigation related to their businesses, wills, trusts, guardianships, or conservatorships. Please give me a call, so that I can help you work through these difficult issues with confidence.

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