Reviewing Wills and Trusts: What Planners Should Look For

Everyone should have an estate plan which has a will, a trust, or both. Although estate plans have a way of being dismissed once created, they cannot be filed away until needed. A regular review is required. The answers to the following questions may suggest redrafting is in order.

Is the estate plan still tax efficient? The amount exempt from federal estate tax has been temporarily lifted so high that most families no longer need to plan for it. The tax focus has therefore shifted to income tax and strategies for taking full advantage of basis step-up at death for appreciated assets.

Has the composition of the estate changed significantly since the estate plan was designed? If assets have grown substantially in value, new planning strategies may be warranted. If they have fallen in value, certain strategies may no longer make sense. Similarly, if an asset has been sold, a new approach may be needed. For example, a plan for managing a family business will not be needed if the business has been sold, and the family now needs portfolio management for the proceeds.

Are beneficiary designations for life insurance and retirement plans up-to-date? This is an aspect of estate planning that is often overlooked. These beneficiary designations operate independently from any will or trust provisions, and they may control large portions of an estate’s assets.

Does the will include specific bequests of property that are no longer owned? For example, if a will leaves “IBM shares” to a family member, but the shares have been sold, this family member will receive nothing under this clause of the will.

Does the estate plan take advantage of lifetime gifts? Up to $15,000 per beneficiary may be given this year to as many individuals as desired without incurring federal gift tax. The annual gift tax exclusion is a use it or lose it proposition, and it is indexed for inflation. To take advantage of the exclusion, for example, a highly appreciated asset, such as shares of stock, could be given to a younger family member. If this person is in a low tax bracket, the shares could be sold free of taxes on the capital gain.

Have pets been taken care of by the estate plan? This is another item that is easy to overlook. New owners for pets should be identified, and financial arrangements may be appropriate.

What about digital assets? A list of passwords for online accounts should be included with the estate planning documents.

Which beneficiaries should receive their inheritance in trust? Traditionally, trusts have been used for beneficiaries who lack the financial maturity or capacity for sound asset management. However, trusts also provide protection from creditors and professional asset management, which may be welcomed by an heir of any age.

If there are trusts, in what circumstances can the trust be invaded? The trust terms should be specific and will depend upon the beneficiary. Invasions for health, education, and maintenance of a standard of living are customary. For younger beneficiaries, incentives may be added. For example, distributions could be authorized for achieving certain goals or life events.

Who will be the trustee of any trusts? The choice of a trustee can be critical to the success of any estate plan. The trustee’s responsibilities and duties should be placed in the hands of experienced professionals, such as those of us at The Trust Company of Kansas.

Where will the estate planning documents be kept? To avoid confusion and conflicts after death, one needs to let beneficiaries know where to find the documentation of the estate plan. A comprehensive inventory of the estate assets will be as helpful as the will, including contact information for the attorneys and related professionals who will be involved in settling the estate.

This list of questions is not exhaustive, even if coming up with answers may seem exhausting. If several years have passed since your estate plan was drafted, or if you do not have one yet, make an appointment with a lawyer experienced in estate planning issues today.    

At The Trust Company of Kansas, we help people. We promise to minimize the burden of wealth management, and bestow the freedom to enjoy everything else. The officers at The Trust Company of Kansas are always willing to discuss your goals for your estate and help you to create a plan that is well-aligned with your wishes. Trusts are one of our core competencies. If you have a specific question about wealth management or trusts, please contact us at (800) 530-5254 or visit, and one of our Certified Trust and Financial Advisors will be happy to assist you.