3 signs you need to update your clients estate plan

Aug 10, 2018 6:00:00 AM


Estate plans are only effective when they accurately reflect your clients’ circumstances, as well as current state and federal tax law. Neglected estate plans not only jeopardize your clients’ estate planning wishes but may also negatively impact their loved ones, not to mention themselves. The unintended consequences of an outdated estate plan can result in issues such as, unintended income and/or estate tax consequences; disqualify a special needs beneficiary from receiving benefits; increased fees and costs associated with settling an estate; leaving less for your clients’ spouse and heirs; forcing loved ones into court; disinheriting desired beneficiaries or including unintended beneficiaries.

To protect clients from these possible scenarios, it is incumbent upon attorneys to periodically reach out to clients reminding them to update their estate plans, so they continue to mitigate financial risks. Not only is this practice good for clients, it’s also good for attorneys by providing an opportunity to increase revenue through repeat client engagement. Below are a few situations that may warrant a rehashing of a clients’ estate plan:

1. An occurrence of a triggering life event

A triggering life event can range from a change in marital status, birth or adoption of a new child, to the death of a close family member. Any of these situations warrant a revisiting of your clients’ estate plan to address changes in beneficiary designations, successor trustees, health care and fiduciary agents. If a trust must be changed, updates can be made by way of an amendment or a complete restatement. However, if there are numerous revisions then a trust restatement may be the better option, to prevent future controversies requiring judicial intervention.

If your client has recently become a parent or grandparent, they may wish to amend their trust to add specific bequests, add an education trust, set up and fund a gifting trust, UTMA/UGMA account, or 529 plan for their new child or grandchild.


2. Changes to a job and/or living circumstances

If your clients have moved to a new state, they may need to update their trust and other estate planning documents to comply with the laws of their new state. They may also need to retitle their new residence in the name of their trust.

A client of yours may have purchased a second home and needs to amend their trust or add a Qualified Personal Residence Trust to address what happens to the second home after death. They may also need to retitle their new residence in the name of their trust.

If your client is a business owner, any changes to ownership would warrant updating their estate plan. For example, if they sold their business, they may need to update their trust or add advanced planning to address additional liquidity. If they still own their business, they may need to create a business succession plan.


Not only would it be advantageous for an attorney to make sure an estate plan continues to mitigate these risks, but updating old estate plans is also an excellent opportunity to increase your practice’s revenue through repeat client engagement.

Download our Insight Brief “Estate Planning Refresh: When and How Your Clients Should Update Their Estate Plans” to learn more.


 3. If it’s been a while

Since state and federal tax laws have changed significantly over the past year, an outdated estate plan may cause income tax or estate tax issues because it doesn’t take advantage of modern, flexible planning options. With the recent increase in the estate and gift tax exemption, attorneys may want to advise clients to:

  • Make additional gifts to individuals and trusts.
  • Decant non-GST exempt trusts to make them GST exempt.
  • Sell appreciable assets to trusts.
  • Establish and fund spousal lifetime access trusts.

Significant family changes may have also occurred if a long period of time has lapsed since the creation of an estate plan. For example, an old trust may now inadvertently disinherit desired beneficiaries or include unintended beneficiaries. Additionally, your clients’ children who are now grown adults, may be better options for successors, trustees, and other agents in place of your clients’ parents, siblings, or friends.

A word of caution: when making amendments to old estate planning documents, be wary of creating future probate issues. For example, an old trust with multiple amendments allows beneficiaries to see prior provisions and changes that have been made over the years, which can open the door to challenges and family conflicts.


Post a Comment