A comprehensive estate plan is often comprised of a number of documents. It’s crucial that they don’t contradict one another. This can cause confusion, delays and expense when it comes time for your executor(s) to settle your estate. Therefore, if you make changes to one document, your estate planning attorney can advise you if similar changes need to be made to other documents to ensure continued consistency.
Two documents that sometimes end up with conflicting information are revocable living trusts and wills. Many people have both because they serve different purposes. However, they need to be consistent.
A living trust often undergoes changes while a person is alive. You may sell a home that was included in your trust. You may open new bank accounts that you include in it. If you want to place a new asset — whether it’s a home, car or account — in your trust, it’s important to do as soon as you acquire it.
Because most people are more familiar with wills than trusts, they often assume that the will takes precedence over the trust. That’s not the case. If a person dies with a revocable living trust and a will with one or more provisions that conflict, the trust will take precedence. That’s because it’s operative during the person’s life, while the will doesn’t take effect until they died.
Another important difference between the two documents is that trusts are considered separate from the individual. Assets included in the trust are technically owned by the trust — not by the grantor of the trust. Trusts don’t go through probate as wills do. That’s one reason why many Californians choose to have them.
If you make changes to the assets included in your living trust, it’s a good idea to review your other estate planning documents to make sure that there are no conflicts. It’s also wise to review your entire estate plan every year and whenever you have significant life events, like marriage, divorce, new children or grandchildren and deaths in the family.
Your estate planning attorney can advise you of any necessary changes to your estate plan and help you ensure that it reflects your current wishes.