Estate Plans That Stick

An estate plan is a snap shot. It takes into account the facts and circumstances that one knows or anticipates at a particular moment in time. Although estate planning professionals preparing documents try to think about what could happen in the future and control for unanticipated circumstances, it is an inexact art. There is no way around this uncertainty. There are a few ways to control for it, however, so that the plan sticks in the future when it is put into action.

Think about future scenarios and how to treat them. For example, commonly an individual will leave property to their children. There is certainly nothing wrong with that. But, it could be that in the future, when that happens, the child is not in a position where having property or money directly in hand would be good. For example, if the child is getting divorced or has creditor issues, giving them property outright might expose that property to the claims of other people. So, in that case, it might be better to leave that child’s share in a trust, because, if structured properly, trusts can protect trust property from third party claims, like those of creditors.

Speak in formulas. If a Will or trust speaks in specifics, like identifying specific individuals for specific items or amounts, it is immediately subject to change in the future. This is because a specific individual may not survive the person signing the Will or trust, or the specific item might not exist when that person dies. Instead, it is often best for the documents, where possible, to use formulas that can determine the outcome of who gets what (and how) in the future based on future facts and circumstances.

List alternative outcomes in case the first plan fails. Often an estate plan runs into trouble when the initial plan does not come to fruition because of a change of circumstances (such as an intended beneficiary dying early) without contemplating an alternative. For example, the plan should contemplate who will serve in needed roles (such as personal representatives and trustees) if the first or second choice is not available. it can be a good idea to permit someone to select further alternatives if all of the named individuals cannot act. Estate planning documents need some flexibility to react if the initial outcome would be defeated by new facts.

Estate plans are not static, so they need frequent updating. Since an estate plan is only a snap shot of facts and circumstances of the time they were signed, it is good practice to review and update them periodically. This accomplishes a few things. First, it adjusts the plan for any new facts, such as a death, marriage, birth, or divorce. Second, it makes the plan reflect the most recent wishes of the person creating it. The purpose of the plan is to implement the person’s wishes, so there is no sense in relying on the embodiment of those wishes from many year previous when they can often be updated without significant cost or effort. Third, when an estate plan is up to date, a subsequent change of circumstances between the last update and the person’s death tends to be less drastic than when many years have passed since the person created the estate plan. Less time often means less significant changes.

By taking these things into account, an estate plan is more likely to stick in the face of new facts and better able to cope with changed circumstances.

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