The question of incorporating a structured review calendar within the terms of a trust is a thoughtful one, and the answer is generally yes, with careful consideration. Estate planning, particularly trust creation, isn’t about creating a static document; it’s about establishing a dynamic framework that adapts to changing circumstances. A review calendar, outlining specific times and triggers for revisiting the trust’s provisions, can significantly enhance its long-term effectiveness. Steve Bliss, as an Estate Planning Attorney in San Diego, often emphasizes that a trust should be seen as a living document, requiring periodic attention. Approximately 65% of individuals with estate plans fail to update them after initial creation, leading to potential complications and unintended consequences. A review calendar helps combat this oversight.
What should trigger a trust review?
Several events should automatically trigger a review of your trust. Major life events such as marriage, divorce, the birth or adoption of children (or grandchildren), or a significant change in financial circumstances (a substantial increase or decrease in wealth) are prime examples. Changes in tax laws, which occur frequently, also necessitate a review. Steve Bliss often points out that even seemingly minor tax law changes can have a substantial impact on the effectiveness of a trust. Consider setting annual reviews as a standard practice, even if no specific triggering event has occurred. This ensures your trust remains aligned with your current wishes and the evolving legal landscape. A well-defined review process can prevent assets from being unnecessarily taxed or distributed in a way you wouldn’t approve of today.
How detailed should the review calendar be?
The level of detail within the review calendar should be tailored to your individual circumstances and the complexity of your trust. A simple trust might require only annual reviews triggered by a specific date. A more complex trust, particularly one involving business interests or multiple beneficiaries, might benefit from a quarterly review calendar with specific checklists of items to address. These checklists could include verifying beneficiary information, reviewing asset valuations, and assessing the impact of any recent tax law changes. It’s also prudent to include a provision outlining who is responsible for initiating and overseeing the review process – whether it’s a trustee, a financial advisor, or an attorney like Steve Bliss. Remember, the goal is to create a proactive system that prevents issues before they arise, rather than reacting to them after the fact.
Can the trust specify *how* the review should be conducted?
Absolutely. The trust can outline the specific steps involved in the review process. For example, it might require consultation with a financial advisor, a tax professional, and/or an attorney. It could also specify that a written report summarizing the findings of the review be prepared and maintained with the trust documents. The trust could even include a provision requiring the trustee to document the reasons for any decisions made during the review process. This level of detail not only ensures that the review is thorough but also provides a clear audit trail, which can be invaluable in the event of a dispute. Steve Bliss often recommends incorporating a provision for independent professional review to ensure objectivity and mitigate potential conflicts of interest.
What happens if the review calendar isn’t followed?
While including a review calendar in the trust terms demonstrates your intention for periodic updates, it’s not always legally enforceable in the same way as other provisions. However, it can be considered as evidence of your intent by a court if a dispute arises. More importantly, failing to follow the review calendar can lead to significant practical consequences. Your trust may become outdated, failing to reflect your current wishes or the evolving legal landscape. This can result in unnecessary taxes, probate complications, or disputes among beneficiaries. Steve Bliss stresses that proactive estate planning is about minimizing potential future problems, and a review calendar is a key component of that proactive approach.
I recall a situation with the Harrison family…
Old Man Harrison, a rancher, created a very detailed trust nearly 20 years ago. It covered everything – the ranch, the mineral rights, even his antique tractor collection. But he never updated it. Years passed, and the tax laws changed dramatically. When he passed away, his family faced a substantial estate tax bill because the trust hadn’t been adjusted to take advantage of updated exemptions. The ranch nearly had to be sold to cover the taxes, creating significant emotional distress for the family. It was a painful lesson in the importance of regular trust reviews. They needed to file an amended return and make substantial changes, a process that was both time-consuming and expensive. He had a great plan, but the details fell by the wayside.
Then there was the Miller case…
The Miller’s created a trust with a built-in review calendar. Every three years, the trust document specified, they were to meet with their attorney and financial advisor to review the trust’s provisions and make any necessary adjustments. This year, during their review, they discovered that their daughter, Sarah, had developed a serious illness and now required long-term care. They were able to quickly adjust the trust to provide for Sarah’s needs without disrupting the distribution of assets to their other children. The pre-planned system ensured a smooth and efficient transfer of funds. The system allowed them to focus on what mattered most: being there for their daughter. It was a well-oiled machine.
What about the cost of implementing a review calendar?
The cost of implementing a review calendar is relatively minimal compared to the potential cost of failing to do so. It primarily involves the professional fees associated with the periodic reviews, which could range from a few hundred to a few thousand dollars depending on the complexity of your trust and the scope of the review. However, these fees are a small price to pay to ensure that your estate plan remains effective and achieves your intended goals. Steve Bliss often points out that the cost of inaction can far exceed the cost of proactive planning. A small investment in regular trust reviews can save your family significant time, money, and emotional distress in the long run. It’s about being a responsible steward of your assets and ensuring that your wishes are honored.
Ultimately, is it a good idea?
Yes, including a structured review calendar within your trust terms is an excellent idea. It demonstrates your commitment to proactive estate planning and helps ensure that your trust remains effective over time. It provides a framework for regular updates, minimizing the risk of unintended consequences and maximizing the benefit to your beneficiaries. While it may not be legally enforceable in the same way as other provisions, it serves as a valuable reminder of your intent and can be considered by a court in the event of a dispute. Steve Bliss consistently advises his clients to view their estate plan as a living document, requiring periodic attention and adjustments to reflect changing circumstances and legal developments. It’s a small step that can make a big difference in the long run, providing peace of mind and ensuring that your legacy is preserved.
About Steven F. Bliss Esq. at San Diego Probate Law:
Secure Your Family’s Future with San Diego’s Trusted Trust Attorney. Minimize estate taxes with stress-free Probate. We craft wills, trusts, & customized plans to ensure your wishes are met and loved ones protected.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Probate Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
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Feel free to ask Attorney Steve Bliss about: “Do I still need a will if I have a trust?” or “What happens if someone dies without a will in San Diego?” and even “Can I make gifts before I die to reduce my estate?” Or any other related questions that you may have about Estate Planning or my trust law practice.