If you haven’t reviewed your trust agreement in the past few years, you should pull it out from your safe deposit box and do so now.
Funding Your Revocable Living Trust
After you sign your trust agreement, you must go through the process of “funding” your trust, or moving assets into the trust. Funding your trust during your lifetime is essential to ensure that your assets will be distributed without the need for court intervention in a process called probate. Funding your trust during your life is also a necessary step that allows your chosen trustee, or successor trustee, as the case may be, to manage trust assets on your behalf in the event you become incapacitated without your trustee having to get a guardianship from the court. You may have done all or some of this after originally signing your trust agreement, but if you never completed the process, or if you have acquired new assets after signing your estate plans, you should review how they are titled.
For most assets, with a few exceptions, moving them into your trust is typically done through re-titling. For example, any deeds for real property, bank accounts and vehicle titles should list the owner as “Your name(s), as trustee(s) of Your Revocable Living Trust, dated The Day You Signed It.” Some assets, such as qualified retirement accounts (e.g. IRAs and 401Ks) and life insurance policies may not be retitled into the trust, but you should ensure your beneficiary designations are updated and accurately align with your planning goals. For qualified retirement accounts, which beneficiaries typically have to pay income taxes on, it’s a good idea to speak with a tax advisor and attorney to ensure you are properly considering the tax consequences associated with achieving your estate planning goals.
Updating For Life Changes
If you haven’t reviewed your trust agreement in the past few years, you should pull it out from your safe deposit box and do so now. It’s always a good idea to review your trust agreement every year or two and with any major life events to ensure that your trust provisions still align with your estate planning goals. Did you execute your trust agreement when your kids were still minors? Do you have a new baby or grandkids now? Has the value of your estate or the assets you own changed? Did you move to a new state? These are only a few of the things that may prompt you to make changes to your estate plans.
Updating For Legal Changes
From time to time, laws that impact your estate plans may change. For example, changes to the estate tax laws and rules surrounding inherited retirement accounts may have dramatically altered the benefit of certain estate planning tools, such as A/B Trusts or conduit and accumulation trusts designed to manage inherited IRAs. As another example, if your trust was executed prior to 2016, it may not give your trustee the necessary powers to access and manage your digital assets, such as email, social media accounts, and online photo albums or cloud-based storage. It’s always a good idea to review your estate plan with your attorney to ensure it aligns with current laws and to make any necessary updates. FBN
By Elizabeth Christy and Trevor Kortsen
For additional information or to schedule an appointment with an attorney, visit Aspey Watkins Diesel’s website at awdlaw.com or call 928-774-1478. Aspey Watkins & Diesel’s Flagstaff office is located at 123 N. San Francisco Street on the third floor in the AWD Building next to Heritage Square.