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4 Times To Consider Updating Your Living Trust

An Arizona man in a hat considers changes to his living trust

Always consult an estate planning attorney before changing a trust.

Planning for the future is a part of life. We work hard to accumulate assets and provide for our loved ones. One effective estate planning tool that can help ensure the smooth transition of assets is a living trust. This is a powerful way to meet financial needs and minimize liabilities.

A living trust is a legal document that allows individuals to transfer ownership of their assets into a trust during their lifetime. They become the trustee and retain control over their assets, managing them as they see fit. Upon their passing, a successor trustee distributes the assets to the designated beneficiaries according to their instructions.

Living trusts are typically revocable trusts that allow the people who set them up to take assets out and change the terms of distribution at any time. People often create trusts to avoid probate (the court-supervised process of distributing an estate).

Living trusts are often updated by the trustor for a variety of reasons that we'll get into. When updating a living trust in Arizona, extra precaution is necessary to make sure you are using a trusted estate planning lawyer. Arizonans were targetted earlier this year by "Will Mills." The scammers sell so-called living trusts for under $900 as a way to gain access to and steal people's private financial information.

4 situations that call for a living trust update

While a living trust offers flexibility and control over a lifetime, certain events can trigger the need for updates. Understanding when and why to update a trust or will is important. Here are some situations where revisiting a living trust is highly recommended:

  1. Changes in family dynamics. Marriage, divorce, the birth of children or grandchildren, or the loss of a loved one can significantly impact estate planning goals. Updating the living trust ensures that assets are distributed according to current wishes and accounts for any new beneficiaries.
  2. Relocation or change of residence. Moving to a different state requires a review of the living trust to ensure compliance with the laws and regulations of the new location. If you live in Arizona but had your estate planning documents drawn up in another state, you may have an outdated trust that doesn't align with state legal requirements. If not updated, the distribution of assets may be complicated.
  3. Acquiring or selling assets. Purchasing or selling significant assets, such as a house, business, or investments, necessitates a review of the living trust. Updating it allows for the inclusion of new assets or modification of the distribution of existing ones.
  4. Changes in financial situation. Substantial changes in financial circumstances, such as a significant increase or decrease in wealth, warrant a revisit of the living trust. This ensures that the estate plan aligns with current financial goals and objectives.

Things to consider before updating a living trust

Before making any changes to a living trust, individuals should consider the following factors:

  • Seeking professional legal guidance. Consulting an experienced estate planning attorney is crucial to successfully navigate the complexities of updating a living trust.
  • Doing a comprehensive review. A change in one document may necessitate changes to others. Reviewing the entire estate plan, including the will, power of attorney, and healthcare directives, in addition to the living trust, is essential. Ensuring alignment among all components minimizes potential confusion or disputes.
  • Understanding tax implications. Updating a living trust can have tax consequences. Consulting with an Arizona estate planning attorney can help a person understand and mitigate any tax implications associated with the updates.

Estate planning help you can trust in Arizona

Life is constantly changing, and so too should an estate plan. When done right, updating a living trust ensures that plans accurately reflect current circumstances and wishes. By being proactive and working with an experienced Arizona estate planning attorney, you can safeguard your assets, protect your loved ones, and achieve peace of mind.

If you need to update your living trust, contact The Law Firm of Brown & Jensen for an estate planning consultation. Founded in 2014, our firm has the experience and legal knowledge to create a living trust that does exactly what you want it to. We have offices in Mesa, Tucson, Scottsdale, Chandler, and throughout Arizona. Contact us today.

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