Here’s why you should review your old estate planning documents!

Many people put together estate planning documents, pat themselves on the back for a job well done, and shove the documents away somewhere for a very long time. This is NEVER a good idea. I know you should never say NEVER, but in this case, it is absolutely true. Here are some of the things that may be living in your estate planning documents which should be reviewed and quite possibly, revised.

A/B Trust Provisions

Many Revocable Living Trusts for married folks, written before 2009 in particular, may have an A-B Trust included in the text.
An A-B Trust basically says that on the first spouse’s death, all of the assets are divided into 2 trusts. The surviving spouse can do whatever he/she wants with one of the trusts–the A part. The surviving spouse has restrictions, imposed by the IRS, if he/she wants to access the B part.

The reason for A-B Trusts was to help couples get out of paying federal estate tax.

In 2009, a couple could have $7,000,000 before worrying about estate tax. Today, a couple can have over $10,000,000 before worrying about estate tax. So now, having ONLY an A-B Trust is overkill and can be more of a hassle than it is worth.
I strongly encourage people with an A-B Trust to rethink the need for it.

A Revocable Living Trust, with an A-B Trust in it, can easily be amended. The amendment can say: I am keeping the A-B Trust in my document. However, if there are no estate tax issues when I die, then my spouse can choose to follow the A-B Trust still, or can decide to get everything 100%.

How does this work? Let’s say our couple is Joe and Mary.
Joe and Mary have a Revocable Living Trust with an A-B Trust in it. Joe dies first and his share of everything is worth $2,500,000. Mary can–
1. Put $1,250,000 in the A Trust to use as she wants. Put $1,250,000 in the B trust and be able to use that money with restrictions. OR
2. Have access to the full $2,500,000, to use as she wants.
Having all of the assets available to Mary will make the administration of the Revocable Living Trust itself easier. Many times, if Mary is up in years, she will have peace of mind that all of the funds are easily available to care for her going forward.

When Was The Last Time You Paid Attention To Who You Named To Make Decisions?

You did your estate planning documents 10 years ago. You named your best friend, John, to make health care decisions for you in your Health Care Power of Attorney. You haven’t spoken to John in 6 years. You heard that he was ready to pull the plug on another friend even before the doctors thought it would be appropriate to implement that friend’s Living Will. Is this really who you want making your medical decisions?

You named your brother-in-law, Max, to make financial decisions for you in your Financial Durable General Power of Attorney. Max, that scumbag, divorced your sister 3 years ago and ran off with his long time girlfriend. Is that really who you want making your financial decisions?

John and Max were great choices when you did your Health Care Power of Attorney and Financial Durable General Power of Attorney. They are obviously horrible choices now. Since we don’t have crystal balls, we can only make the best choices of folks with the info we have at that time. Because life circumstances have a funny way of changing, you have to keep reviewing your estate planning documents.

The good news is that the estate planning laws don’t require major estate planning revisions very often. However, life itself marches on and presents new challenges and new assessments of friends and family.

Get in contact with me today to make sure your estate planning affairs are in order.

Where There’s A Will, There’s A Way