Trust Review

9 Good Reasons to Conduct a Trust Review

If you have a revocable trust, when is the last time you reviewed it to make sure it still meets your goals and complies with current law? If it has been a few years, then it’s time to conduct a thorough trust review – which is usually best done with the help of your estate planning attorney.

Here are 9 good reasons you should schedule a trust review soon:

1. Check successor trustees. For many revocable trusts, the trust owner serves as the trustee with a spouse named as co-trustee. You should also have designated others to serve as successor trustees, so be sure those designations are still correct. You should also specify when you want successor trustees to step in – upon the death of the first spouse or after both of you are gone.

2. Trustee removal by heirs. Have you provided your heirs with the ability to remove successor trustees? This should be considered and addressed specifically in your trust.

3. Distribution of assets by co-trustee. Many trusts are created that provide the option for co-trustees – generally a surviving spouse – to change the distribution of assets in the trust at his or her discretion after the death of the trust owner. However, this could lead to family conflict in cases of a second marriage or if a surviving spouse remarries. 

4. Asset protection. These days it is probably a wise move to ensure your trust continues during the lives of your children to protect assets from creditors or divorce.

5. Funding the trust. You must be sure you have titled all the assets held in the trust in the name of the trust, not the original owner. This is called “funding the trust”, and if this is neglected, your trust is a bust.

6. Check beneficiaries.  Make sure the beneficiaries of your trust are coordinated with other beneficiary designations in your estate plan for retirement and investment accounts.

7. Consider age-based distributions. Many trusts hold assets for children or grandchildren until they reach a certain age – usually 21 or older. However, every family is different, so if you believe those distribution ages should change, you will need to update your trust.

8. Retirement plan benefits. The best way to pass on retirement plan benefits is via a beneficiary designation form filed with the custodian of your retirement plan. However, some people choose to name a trust as beneficiary of retirement plan assets.  In this case, your trust should have special provisions that allow annual required minimum distributions to be stretched out for as long as possible.

9. Estate taxes. There were major changes to the estate tax laws a few years ago, so if you have not reviewed your trust since that time, it should be reviewed by an estate planning lawyer to be sure it is still current and complies with these relatively new laws.

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