A comprehensive estate plan should be dynamic and will often require modifications as your circumstances and wishes change over time. A marriage, divorce, new addition to your family, amended state or federal laws, and an overall shift in priorities may require an adjustment to your estate plan. Additionally, assets placed into popular trust instruments may also require amendment when an individual’s circumstances change.
Estate plans are normally easy to modify or repair when a person is alive and has not suffered any impairment to his or her mental faculties. Too often, however, problems with an estate plan do not surface until after an individual’s death.
Wisconsin law dictates how a will or trust may be modified. Generally, an irrevocable estate planning instrument can be modified following a person’s death using one of three methods: construction, reformation, and amendment. A court may correct or modify an ambiguous provision in a will or trust document through construction proceedings. Such proceedings are also used when an estate planning document has failed to account for a contingency that has come to fruition. During a construction proceeding, a court seeks to determine specific provisions based on the overall intent of a planning document. If determining a decedent’s intent becomes impossible, the court will use statutory preferences to determine who will inherit a particular asset.
A reformation proceeding is usually used to fix simple and unambiguous mistakes such as the misspelling of a name in estate planning documents. A reformation proceeding may also seek to change an estate plan retroactively in order to insert a necessary and obvious clause that was somehow overlooked. Because reformation may not have an effect on how a trust is taxed, it is especially important to ensure your trust documents are created by a knowledgeable estate planning attorney. By hiring an experienced professional to help you create your trust documents, you can ensure your estate does not become subject to unnecessary or unwelcome tax consequences.
Although amendments are normally allowed for a revocable trust, this is not generally the case with an irrevocable trust. A well written irrevocable trust will, however, include a provision that allows administrative and other amendments so long as the amendment does not have an impact on the dispositive trust provisions.
In order to fully protect your loved ones, it is essential to repair outdated estate planning documents prior to your death. By taking care of this in time, you are in control. Relying on the courts to ascertain your intent later can be both costly and time-consuming. Because state and federal tax laws and your wishes can change, it is a good idea to have a relationship with a capable estate planning lawyer to review your estate plan on a regular basis.
Krause Donovan Estate Law Partners, LLC, can assist you with all of your estate planning needs. Our experienced attorneys help clients achieve their end of life wishes. They can also help you with probate, trusts, wills, health care documents, powers of attorney, insurance, and more. We invite you to request a consultation with our estate planning attorneys.
“Fixing” the Broken Estate Plan, by Rob Clarfeld, Forbes