The Importance of Updating Your Estate Planning Documents

You may feel your estate planning affairs are in order – after all, you visited an attorney back in the 90s, and not much has changed since. However, estate planning gets out of date. Here are a few reasons why your plan might be not as good as it could be:

1. Changes in Law

Subtrust Funding and the Estate Tax Exemption

Estate planning documents may be out of date because of changes in law. The biggest changes in law we have seen have to do with subtrusts, the federal estate tax exemption, and a new concept called “portability”.

The federal estate tax is assessed onto all decedents’ estates larger than the exemption amount in the year of death. In the 90s, the exemption was under $1 million. While rising steadily in 21st century, the exemption did not reach $2 million per person until 2006.

Because of the low exemption amount, many Silicon Valley estates were potentially or actually taxable. Thus, most estate planning attorneys drafted complex trust instruments which allowed the surviving spouse to postpone the payment of the estate tax until after his or her death by mandating the funding of various subtrusts (often referred to as “A”, “B” and “C” Trusts or Survivor’s and Bypass Trusts).

It’s very important to review your existing trust in light of the size of your estate and the current exemption amount ($11.4 million per person in 2019). Because of the change in the exemption amount, most estates are no longer taxable, and the old documents are no longer needed. Furthermore, due to “portability”, in many cases there may no longer be a need to fund a Bypass Trust (which some older Trust documents may mandate).

Health Care Directive

The Health Insurance Portability and Accountability Act (HIPAA) was passed on August 21, 1996, and various related regulations have been enacted and implemented in the late 90s and early 2000s. For our purposes, one of the main consequences of HIPAA was the restriction of sharing confidential medical information with anyone, except the patient herself. A 3rd party needs a health care directive, signed by the patient before she lost capacity, containing an authorization to share the confidential medical information with the named 3rd party.

It’s important to update your estate planning documents because older Advance Health Care Directives simply may not have the language required to bypass the HIPAA restrictions and authorize medical professionals to share your confidential medical information with anyone but you. What this means is should you become incapacitated, your loved ones could run into extreme difficulty trying to manage your health care on your behalf.

2. Changes in Fact

Other reasons to revisit your old estate planning documents have to do with changes in fact – changes in your personal life. For example, since you put the original plan in place:

  • Have the people you named as successor trustees gotten ill, too old, passed away, or simply moved away?
  • Do you still like your distribution scheme?
  • Have you gotten married or divorced?
  • Has the size of your estate changed substantially?

These and other questions will help you do a preliminary assessment on whether your existing estate plan is out of date because of changes in fact.

3. Not Properly Funding Your Trust(s)

The third reason to revisit your estate planning is to make sure your trust is properly funded. Clients frequently email me letting me know that they just purchased a rental property, but forgot to title it to the trust. Or, they take real estate out of the trust during the refinancing process, and forget to put it back it.

Typically, it costs $300 per property to transfer it into the existing trust. That’s if the client is alive. If the client doesn’t get around to transferring it until after his/her death, then it costs about $3,000, as the family needs to petition the court to transfer the property. The choice is clear.

In conclusion, it’s important to revisit your estate plan every 5-10 years, or sooner if major life changes occur. Please feel free to email should you have any questions.


"I would highly recommend Marina. She has a very efficient process and is very meticulous when it comes to details. She helped us think through our trust and will issues very carefully. We left with completed paperwork after just two meetings. A huge relief for us, given we put off the process for ten years."
Stephanie G, 9/21/11