A trust is a legal arrangement that allows you to transfer assets to a designated manager. The trustee holds the property’s legal title but has to manage it according to the terms of the document. You can use a trust management company for estate planning, tax optimization, or asset protection. Here is when you should review a trust:
Tax Law and Beneficiary Changes
When tax laws change, they may affect the tax obligations of your beneficiaries. Review the trust with an advisor for strategies to prevent losing capital gains. Reviewing a trust helps keep it up-to-date with the current legal requirements. If your trust fails to comply with new rules, it may face penalties or extra taxes. You can review the trust to utilize new tax benefits and avoid unexpected costs.
You need to review your trust when you change the recipients and beneficiaries of your assets. This helps you avoid legal issues and delays when executing the arrangement. Changes in beneficiaries need an adjustment of the trust’s terms. Regular reviews by a trust management firm help maintain control over your estate plan according to your wishes.
Family Structural Changes
Family changes like marriage, divorce, or having children can impact your trust document. You need to make updates according to how you would like your assets to be distributed after a significant life change. Account for new children, stepchildren, or an ex-spouse to avoid disputes and legal challenges. You can appoint new guardians for minor children if you need to.
Asset Changes
Reviewing your trust when you receive new assets helps account for what you own and where it is designated to go. Asset changes include receiving an inheritance, selling investments, or buying new property. When you purchase a new home or investment property, you must retitle it in the name of the trust. If you sell an asset, the trust no longer owns it, which must be reflected in the trust documents. Further changes in asset values, like stocks, must be adjusted for distribution to beneficiaries.
Health and Power of Attorney Changes
If you start experiencing changes in your health, you need to review your trust. Health changes include serious injuries, illness, or a decline in your physical ability. If you become sick, the people in your trust may need to step in and manage your affairs. Reviewing your trust early allows you to give this authority to people you trust. This helps protect your assets as well as your finances.
The power of attorney lets you choose someone to decide on your behalf if you can’t do so yourself. This person handles your property, financial matters, and medical care, depending on the power of attorney you set up. The powers may be broad or limited and can continue even if you become incapacitated. If you appoint a new agent, you must review your trust to align their powers with your wishes.
Learn More About Trust Management
Regularly reviewing your trust helps maintain a comprehensive and effective estate plan. You can revisit your trust during key events like marriage to reflect your intentions accurately. Staying informed about tax law changes helps optimize the financial benefits of your trust. Contact a reputable fiduciary services provider to learn more about their trust management services.
