Clients know things change. And one common question in an estate planning meeting is: “Can I change my mind?” Quickly followed by, “Will you charge me for that?” Yes, probably. And yes.
As we all know, life goes on. Every person should, from time to time and after a major life event, review their estate plan to ensure a couple of things. First, that their goals are the same. And second, that those goals are actually captured in the plan. If you read your documents, and you are not sure what they mean, it’s a good idea to consult with an attorney.
Can I Make Changes?
If you find that you would like to make adjustments, you probably can. For most documents, changes can be made so long as you have the capacity to do so. “Capacity,” in an estate planning context, is called “testamentary capacity.” You have it if you know just three things:
1) your stuff — that you have assets and generally what they are,
2) your people — that you have loved ones and who they are (also known as “the natural objects of your bounty”), and
3) your plan — that your estate planning documents determine whether your stuff gets to your people (or not).
You need to know those elements when you initially sign your documents and again when you make any changes.
How to make changes depends on the documents you have.
Things Change: Wills
The central feature of many estate plans is a Will. A Will of course directs an executor (called a Personal Representative in Arizona) to distribute assets after death, usually to people or entities. An amendment to a Will is called a codicil.
Codicils are becoming rare because, thanks to the ability to save digital files, drafting a new Will that incorporates changes is just as easy, often easier, than creating a new document. Both wills and codicils have the same execution requirements. Signatures of the creator, or testator, and two witnesses are mandatory in Arizona. So, most of the time, the level of effort is about the same. Plus, having one document is easier than keeping track of and having to compare two. So you might as well start over.
Things Change: Trusts
The other major estate planning document is the revocable trust. It’s a will substitute that serves to organize your financial affairs during lifetime and helps avoid probate at death. Some trusts are “irrevocable.” But under some circumstances, they also can be changed. In Arizona, a trust is revocable unless its terms expressly provide that it is irrevocable. So if the trust doesn’t specify, it can be changed.
Trusts can be amended or revoked, and the trust terms should dictate requirements. Most require a signature of the person who created the trust. If there are two creators (common for married couples), trusts usually require both signatures. You may need to sign before a notary, or to deliver the amendment to the trustee, or take other steps.
Under Arizona law, if there is a method provided in the trust, and the trust states that the method is the exclusive method, “substantial compliance” will suffice. If there is no method listed or the method is not “expressly exclusive,” an amendment can be made by a later will, codicil, or other writing signed by the creator that indicates clear and convincing evidence of the person’s intent.
More About Trusts
If you become incapacitated, your agent under financial power of attorney can make trust amendments if you grant that power in the power of attorney document. No agent can change a will.
Even if you make major changes, you don’t have to revoke it and start over, as you would with a will. You can “restate” your trust with a document that revises all the trust provisions. Such a “Restatement” allows updates while retaining the name of the original trust and titling of the trust assets.
Note that if you have a trust and acquire new property, you usually don’t need an amendment. You probably can simply title the asset to the trust, but every situation is different, so if you aren’t sure, check with your attorney.
Things Change: Other Documents
Clients often think about their will or trust but forget to review other documents. That can result in unwelcome outcomes. Maybe you removed an estranged child from your will but not as back-up on the power of attorney or life insurance policy. The child could end up in charge of finances and receive the policy proceeds.
It’s a good idea to review your entire plan. Review appointees for agents (and alternates) on health care and financial powers of attorney. Execute new documents to make changes.
Review beneficiary designations on IRAs, 401(k)s, annuities, savings bonds, life insurance, etc. To make changes, request proper forms from the financial institutions.
In my life, things change a lot. Do I really need an attorney? Can’t I just cross out old provisions and write in new ones? Not the best idea, even if you add initials. The problems is, the new writing might be enough to revoke the old provision but not good enough to create a new one. For a Will, for instance, the new writing lacks witnesses. As a result, you might not get what you intended. That’s the opposite of what an estate plan is supposed to do.
Can I write my own new will or trust amendment? That’s a better idea, but still not ideal. Having an attorney assist helps ensure that your documents address any recent legal issues (in addition to the changes you want) and that you execute your documents correctly. And if someone suggests you didn’t know your stuff, your people, or your plan, that fact that you had counsel will help ward off the attack.