Why it is Critical to Review Your Estate Plan Periodically

This is important, especially for us women!

From the Desk of San Diego Trust Attorney (located in Carmel Valley/Del Mar 92130), Kristina R. Hess:

I write this post with a little bit of a heavy heart…

Sometimes it is too late to fix things that are not right or how you want them to be…

At KR Hess Law, we review all of our clients estate plans, trusts, irrevocable trusts, wills, financial powers of attorney, children guardianship and medical powers every three years.  This is the minimum amount of time that should go by.  For our clients on our VIP membership program, we will review and update their plan once per year.

Here’s why… (all names and details have been changed to protect privacy and confidentiality, this is a fictitious example based upon various real life events)

Sam and Sally Smith of Rancho Santa Fe, California have been married for 25 years and have two children together John and Mary.  Sam and Sally had an estate plan prepared over 15 years ago when their children were young and living in their home in Del Mar.

However, in the last 15 years a lot of things have changed for the San Diego Smith Family.

First, Sam and Sally moved.  When they moved, they did not execute a new deed, so their new million plus dollar home was not owned by their Living Trust.

Second, Sam was suddenly diagnosed with an advanced form of cancer and passed away within 4 short months of his diagnosis.

Third, Sam and Sally’s son, John, has autism.  While the couple had always hoped that John would improve, his condition has actually deteriorated and John has special needs and is considered a developmentally disabled adult.

After Sam passed away, Sally came to see their local Personal Lawyer and San Diego Trust and Estate Attorney at KR Hess Law (me – Kristina).  However, this was our first meeting and we had not drafted their previous estate planning documents, nor were the Smiths previous clients of the firm.

Accordingly, the Smith Estate Plan had not been reviewed or updated in the last 15 years.!  The problem is that Sally could not even recall how she and Sam had decided to divide their estate or provide for her or her children.  In her state of grief, Sally barely recalled they had a Trust.  Somehow she managed to find an estate planning binder from her prior trust attorney located in San Diego.

She brought the binder in to our initial meeting and she was shocked to discover that the family winter home in Lake Tahoe (which Sam had inherited from his grandparents) was deemed Sam’s separate property and Sam left the entire property to John, their special needs son!

Not only that, now Sally had to deal with the fact that her current home was not owned by their Joint Revocable Living Trust and she would have to go through Probate Court regarding her husband’s 50% ownership in their home.

There were other suprises too, but at the end of the day, not only was Sally grief-stricken having lost her dear husband, now she had to deal with a mess.

The worst part about it is that had she worked with a personal lawyer like me, we would have reviewed her plan, she would have known her current home was not “funded” to her trust (and we would have taken care of it), she would have known that her husband left the vacation home to their disabled son, and she would have made sure she had a special needs trust established for her son to receive any inheritance, and she likely would have worked with her husband to change who received what, when.

Ah, yes, hindsight is 20/20.  But the biggest thing I see are 1) California estate plans that are not up to date (your life has changed, the law has changed, your assets have changed…), your distribution of assets might not be what you wanted 15 years ago, maybe your child you thought would be ok, needs a special supplemental needs trust to make sure that he or she qualifies for governmental assistance.

2) Your Trust isn’t fully funded… You moved and bought a new home, is it owned by your trust?  What about your beneficiary designations on your retirement accounts and life insurance?

3) Sally’s life insurance policy went to their other child, and Sally was left without the resources she needed to administer the estate.

It breaks my heart, particularly when these things happen to women.  Maybe your husband was the CEO of your family and managed the finances.  But statistically speaking the wives live longer than the husbands.  So, it is important that you know the details of your estate plan, have it reviewed periodically, and are taken care of when your spouse is no longer around.

Ah, the messes that can be avoided with a little forethought and prior planning.  You see, once someone dies, that portion of the trust (as it relates to his or her half of community property and any separate property) becomes irrevocable!  So, it is very difficult (and sometimes impossible) to make changes once someone dies.

Don’t put it off, have your estate plan reviewed today.  Normally, I charge $950 to do an estate plan review, but this month, in honor of all the Sally and Sam’s out there, I am offering 2 complimentary mini reviews!  So call our office today (858)794-1426 and ask for Sarah, the client services director at KR Hess Law.

I would love to review your plan, make sure it’s up to date, and make sure that you and your loved ones will be cared for and no one is left with a mess that needs cleaned up!

Create Legacies (not messes) that Last,

Kristina Hess

San Diego Living Trust attorney

Living Trusts, Wills, estates, probate, conservatorship — all your Estate Planning Needs.  Our law office is conveniently located in Carmel Valley (Del Mar) off  High Bluff Drive.