Life is dynamic and not static. That said, keeping one’s estate planning documents relevant and on point as life changes requires periodic updates.
A person should always redo their estate planning documents when they either get married or get divorced in order both to avoid possible unintended consequences and to properly provide for their new situation in life.
California’s Probate Code presumes that anyone who does not update their will or trust after getting married did so unintentionally, and not because they intentionally omitted their spouse. The law provides an “omitted spouse share” of the deceased spouse’s estate in such circumstances; the same as the surviving spouse would have received if the deceased spouse died without any will or trust.
Had the deceased spouse while alive updated their estate plan – after getting married – and acknowledged their marriage, then the deceased spouse could have left all the deceased spouse’s separate property and one-half of any community property to whomever he or she wanted.
On the other hand, California’s Probate Code invalidates any gifts to a former spouse made under a will or trust that executed prior to divorce: the former spouse is treated as having predeceased the deceased spouse. The law presumes that the decedent would not have wanted to continue with any gifts to the ex-spouse, unless such gifts to the now former spouse are restated after the divorce.
A person should also revisit their estate planning when the life circumstances of the beneficiaries materially change. That includes when family members die or are born or a beneficiary’s life circumstances have changed to such an extent that to proceed with the gift “as is” no longer makes sense.
For example, if a beneficiary got into creditor problems or went on to receive Medi-Cal or other needs based government benefits, then an outright gift usually would not make sense. Instead an asset protection or special needs trust, as the case may should be considered.
Naturally, anytime a person’s estate planning intentions materially change estate planning documents should be updated in order to be consistent with present intentions.
For example, a parent who reconciles with a formerly estranged child may want to include that child as a beneficiary under their will or trust.
Updating estate planning documents is also necessary when major changes in the law affect the basis for the original estate plan.
For example, since 2002 the federal Estate Tax threshold at which the estate tax is imposed has steadily increased from decedent’s estates whose net worth exceed one million dollars now only to estates which exceed some five and a half million dollars. Nevertheless, there are many married couples who continue to have so-called A-B trusts for federal Estate Tax minimization purposes.
Not all events require updating one’s estate planning documents. Buying and selling trust assets does not usually require updating one’s will or trust. If the estate plan divides the estate based on percentage distributions then buying and selling assets does not affect the percentage distribution scheme. However, if a specifically gifted asset is sold which is important (value or sentiment) then that may require an update to avoid unintended consequences.
As a simple rule of thumb, people may choose to revisit their estate planning every five years, but sooner if major changes occur. Naturally, the extent of any updates can vary from simple amendments (such as who serves as trustee or executor) to completely new documents, as needed. Lastly, if the existing estate planning documents were inadequately drafted then starting anew is often best.