Estate planning attorneys tell their clients to review their circumstances whenever there are significant lifestyle changes such as marriages and divorces, births, deaths, illnesses, retirements, inheritances, among other things. Another reason for a client to review their plan is a change in the laws governing estates. Unless the attorney who draws up an estate plan agrees to keep the client informed of changes, it is the responsibility of the client to take the initiative. It is generally unwieldy, for a variety of reasons, for an attorney to contact clients whenever the laws changes.
You might ask how the client can be charged with knowing about changes, let alone understanding when to take action. Good question. The answer is not that major changes are usually well-publicized, although that is not a bad idea. It is that the client should, every five, years or less, depending on circumstances, make an appointment to review his/her situation with an estate planning attorney. In this way, changes in the law and in personal circumstances will be dealt with in a timely manner.
A good example of how following up can be a benefit is illustrated by a client (whom I will call Marie), who recently came to my office. She and her husband (I will call him Ted) had gone to a seminar in 2002 at a local VFW hall. They saw a presentation about the importance of setting up a revocable living trust to avoid New Jersey probate. At the time, they had a combined estate of a little more than $2 million. There was a possibility that the estate of the survivor would be more than the federal exemption amount ($1 million at the time). The attorney set up a trust intended to minimize taxes and provide other protections. He said the fee for the trust included an annual one hour consultation to go over any changes in the law or their personal circumstances that might require a modification of the revocable trust. The fact that Marie and Ted did not understand the trusts did not seem to matter to them. After all, they would be meeting with the lawyer every year. They assumed that if anything needed to be done, the lawyer would handle it.
Indeed, Marie and Ted had their annual meeting with the lawyer and were told each time that everything was in order. I would like to say that in 2011, when the tax laws changed significantly, the attorney told them their estates were no longer subject to the Federal estate tax, and the complicated provisions of the trust were no longer needed and that they could revise the trust to include much simpler provisions. Unfortunately, there was no such conversation in 2011 or in the next two years. Actually, the trust was completely redone at an additional expense in 2009 with all of the complicated provisions still in effect, and they remained so until Ted's death in 2015, even after annual consultations in 2010, 2011, 2012 and 2013. The trust is technically correct, but it is overkill, with many provisions that are unnecessary for people in Marie's and Ted's circumstances.
Because all of Marie's and Ted's assets had been transferred to the trust, there was no need to probate Ted's will. Probate avoidance was, therefore accomplished at a savings of $130.00. However, Marie will have to pay many times the amount saved in administrative expenses because the trust is so unnecessarily complicated.
In short, Marie and Ted did what they were supposed to do and should have had a good outcome. If they had been provided with the right documents at the right time, this would have been a textbook case of good planning and good follow-through.