02 Apr Eight Years Later, Client Finds He’s Leaving Estate to His Ex-Wife!
A recently remarried client came in to our Walnut Creek office to name his new wife and daughter as beneficiaries for some of the assets he held in an individual Trust. The couple held the Walnut Creek home in which they lived as joint tenants, but he had other assets, including real estate that he had acquired prior to this marriage, that he wanted to continue to hold and gift separately.
If something happened to our client, his ex-wife would inherit most of his assets
Our client hadn’t reviewed his Trust in more than eight years, and he was shocked when he realized that if something happened to him, all of his assets, exclusive of the home he held with his current wife, would go to his ex-wife, who was still identified as his Successor Trustee, his Power of Attorney and Agent for his Advance Healthcare Directive. We immediately scheduled an appointment to completely rewrite his Living Trust. This story illustrates the importance of periodically reviewing your Trust allocations.
Completing your Trust: the responsibility doesn’t stop there
Most people complete their Living Trusts, fund them with real property and assets, and are delighted to cross it off their to-do lists. But the responsibilities of a Trust don’t necessarily stop there. A Living Trust should be updated with what we call “important life events”—a birth or death in the family; changes in relationships–including divorce; or acquisition of property or other assets that could affect the inheritance of your loved ones. There are also changes to laws that may prompt people to make changes to their Trusts.
Changes in circumstances may necessitate the appointment of new Trustee and Agent
In many cases, when people created their Trusts, their children were young; the primary concern was providing financial security for their children and naming guardians in the event of their death. They typically named close friends or relatives as Successor Trustees and Agents for their Financial Power of Attorney and Advance Healthcare Directives. But now those children are grown, with kids of their own. They want their children to take on the responsibilities of Power of Attorney, of managing their assets if they are no longer able to do this and making their healthcare decisions if it becomes necessary.
Periodically review four key elements of your Living Trust
We encourage people to periodically review four key elements of their Trust and other estate-planning documents to see if the information is still relevant.
- Trustee(s). The person who will manage the distribution of a Trust’s assets after someone has died. To think about: depending on the complexity of the estate, this can be a time-consuming process, and it can involve dealing with sometimes-complex financial accounts. A Trustee should have the time to do this and be good with numbers.
- Agents for Financial Power of Attorney. Agents are those who will manage finances for those who can no longer do this for themselves, including paying bills and taxes.
- Agents for Advance Healthcare Directive. These people are selected to make healthcare decisions for those who can no longer make their own, including communication with a physician.
- Distribution of assets after death. Review of all assets and the people who will be receiving them. The big-ticket items are obvious—life insurance policies, brokerage accounts and real property. But it also includes those things of sentimental value that may not have great monetary value. Sometimes these items, if not properly identified, can become very contentious. The more detail you provide, the easier it will be for your family at what will surely be a very difficult time.
At California Document Preparers, we help our clients create the amendments that update their Trusts. While we frequently work on Trusts prepared by our own team for existing clients, we also routinely amend those prepared by attorneys or by clients themselves.
Is it time to review your Living Trust?
Like the client described above, if it’s been a while since you created your Trust, there’s a good chance you need to make changes in the way your assets will be distributed and the people you’ve named as your Agents and Successor Trustee. Schedule an appointment at one of our three Bay Area offices today today!