Content courtesy of GEIGER LAW OFFICE, P.C., author Brenda Geiger, 1917 Palomar Oaks Way, Suite 160, Carlsbad, CA 92008, (760) 448-2220.
With the hustle of the holiday season behind us and the start of a brand-new year, we often make goals to face things we’ve been putting off. One item that often gets overlooked or put aside is creating an estate plan or neglecting to update an old one. Both of these situations can have serious and sometimes devasting consequences for you and your loved ones.
Of course, procrastinating to make an estate plan can cause hardships for your family after you pass, but so cannot updating your existing estate plan on a regular basis. Often people can have a false sense of security when in fact they haven’t updated their estate plan in years, sometimes decades. It can also create big problems if an incapacitating event occurs.
Marriages, divorces, births, and deaths can significantly alter the dynamics of a family. An outdated estate plan may not reflect your current wishes or the current state of your family or assets, potentially leading to unintended beneficiaries among family members. Just as personal circumstances can change, so too can your financial situation. Increases in your assets should be accurately reflected in your estate plan to ensure proper management and distribution. An amendment or restatement of your revocable trust may be needed to match your current situation.
I once had a client come to me after the death of her mother. Her mother had a trust that had been set up over 20 years ago by another law firm when her estate was modest (but had since tripled in size to over $3 million). The trust had never been updated and called for her assets to be distributed outright 50/50 to her two adult children. Unfortunately, one of the children, the Trustee daughter’s brother, had pre-deceased their mother a few years before. His portion of the inheritance was passed on to his two teenage children who inherited the money outright. This meant that they inherited over $750,000 each once they turned eighteen with no restrictions on how it was to be managed or spent. We highly doubt this was the intention of their grandmother. If she had updated her trust after her son died, she could have made provisions on how and when her granddaughters could have access to the money (and even protect them from divorcing spouses, creditors and predators). Instead, one of the grandchildren dropped out of school and spent all her inheritance quickly.
Laws governing estates and trusts can also change. An estate plan that was compliant a few years ago might now be outdated due to legislative changes, potentially causing legal complications for your heirs or unintended tax consequences. Another client of mine referred his mother to me after his father had died. His parents had an out-of-date A-B type of joint marital trust that was never updated, and it resulted in them having to pay hefty capital gains taxes when they sold assets because they had not taken into account current tax laws. Again, this situation could have been avoided if they had simply had their trust reviewed and updated by a skilled Trusts & Estates attorney.
I strongly recommend reviewing your estate plan regularly with your attorney to ensure it remains aligned with your wishes and circumstances. Knowing your estate plan accurately reflects your current wishes provides peace of mind to both you and your loved ones. And it assures that your legacy will be managed as you intended and prevent familial discord.
Reviewing your estate plan every 3-5 years can bring you peace of mind that your family and hard-earned assets are protected. If you or a family member need help establishing or restating an estate plan, please reach out to our Intake Department at 760-448-2220 or at https://www.geigerlawoffice.com/contact.cfm.
We have offices in San Diego and Orange Counties, but we assist can families throughout California as well.