Written by Darius Khayat // August 16, 2012 // Articles

All too often I come across new clients who come in for a long overdue review of their estate plan and I discover that significant life changes occurred over the course of many years yet the client did not address them as they arose.  As a matter of good practice, most estate planners discuss with their clients the need to review and update their plan when changes occur and suggest some of the more frequent reasons a review might be appropriate.

The most common occurrences I see that should be addressed promptly are:

  1. Purchases of new real estate or the refinancing of existing properties.  A typical living trust will avoid probate and, in some circumstances, reduce estate tax on your passing.  The problem is however that in order for the benefits to be realized the trust must actually own the assets in question.  When properties are refinanced, typically the lender will require the title to be transferred to the names of the borrowers and taken out of the trust.  On new purchases, title is generally taken in the buyer’s name individually.  If a subsequent transfer to trust is not accomplished, a probate or conservatorship could result.  The fix is simple and relatively inexpensive however it is not commonly recognized by the client that this occurrence is a significant one.
  2. Open a new bank or investment account?  Care should be taken to make sure that you advise your broker or banking representative that you have a living trust and that you want your account to be registered or titled in the name of the trust.  There are exceptions to this however as a general rule, your trust should be the “owner” of these types of taxable accounts.  Further, new assets should be reviewed to see if they warrant changes in your plan as tax or other considerations might exist that didn’t prior to the change.
  3. Get married or divorced?  This is a big one!  Unfortunately, I have run across a number of cases where the client did not think to update, or at least review, their plan following one of these occurrences.  The results of this oversight could be catastrophic.
  4. Have new children?  It is not uncommon to come across an estate plan drafted with specific wishes expressed relative to children living at the time the documents were executed.  Having a new child and not updating your plan accordingly could affect the way in which your estate is distributed and produce unanticipated results.

The bottom line is that it is good practice to at least call your estate planner if you have an event in your life you think might warrant a change and, in addition, make it a practice to periodically review your plan for updates in law or other changes that might warrant revision.


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