The trust is done. The binder is on a shelf, tabbed and signed, and it has been there since a president or two ago. That’s the point where most people stop thinking about it, and according to Jason Gaudy of Gaudy Law in Upland, California, it’s roughly where the trouble starts.
Why do most people end up with a revocable trust instead of an irrevocable one?
Because life keeps moving. Gaudy’s reasoning is that the vast majority of people need a revocable trust precisely because they’re going to want to change it. Revocable, in his words, means you can amend it or get rid of it entirely.
The irrevocable versions he does draft tend to serve narrow purposes: an irrevocable life insurance trust is generally an estate tax device, and with the federal exemption around $15 million per person, most estates never get there. Clients sometimes arrive asking about Nevada or Wyoming structures, and his first question is whether the basic framework trust exists yet.
There’s an irony he likes to point out anyway: every revocable trust becomes irrevocable when the person dies. “We like to say it goes from paper to stone.” Whatever the document says on that day is what it says forever. The window to fix it is the window you’re in right now.
What actually makes a trust go stale?
Gaudy uses a version of his own life as the example. Someone does a living trust in 2007. Since then there are more children (two in college now, one in high school), and the parents want them able to step in as trustees at some point. The afterborn children need to be added. The family moved. The schedule of assets no longer matches what they own.
None of that is exotic. It’s just time passing.
His firm’s shorthand for the review triggers is a short list: a marriage, a birth, a death, a divorce, or the purchase or sale of property. Gaudy Law sends clients an annual letter or email asking whether any of those things happened, on the theory that most years the answer is no and nothing needs to change.
He’s careful not to oversell the maintenance. He says you really don’t have to update it very often. What matters is that when something changes, the client calls the attorney who drafted it and asks whether anything needs to be done.
One example of how quietly a plan can drift: he’s had cases where the named trustee was a perfect choice at signing, and then that child got married, and the new spouse became a conflict point in the family. Nothing in the document changed. The right answer did. (If picking the trustee is the open question, that’s covered in probate vs. trust and the trustee mistake that leads to litigation.)
What happens when nobody can find the trust?
Gaudy says his office fields a call about once a month that begins, essentially, did you happen to do a trust for my dad, because we can’t find it.
The older the plan, the likelier this is. Firms that have kept digital files for the last 10 or 15 years can usually produce a copy. Attorneys from further back who have since retired or died often left nothing but paper. He described a live case where the trust can’t be located but the deed shows the property titled in that trust, so the firm has to go to probate court to get it back out.
His recommendation is unglamorous: keep the trust, the deeds, and the related documents somewhere the family can actually find them, in digital form, and make sure the children know where that is. His own firm keeps client documents in a portal clients reach through an app.
What if the attorney who wrote it is gone?
Less of a problem than people assume. Gaudy notes that a family isn’t locked into the drafting firm for the administration or the probate; any qualified attorney can handle it. It happens constantly in his practice: a parent worked with a lawyer elsewhere in California and the adult children want someone closer to home.
What should a surviving spouse revisit?
A well-drafted trust reads as a sequence: what happens while both spouses are alive, at the first death, at the second, and if someone becomes incapacitated in between. After the first spouse dies, Gaudy says most trusts are designed to simply stay in place, so the answer is often nothing. Some, though, are AB trusts requiring a split at the first death, and there may be an affidavit of death to record against the property unless it’s held in an LLC. His recommendation in that moment is a phone call to the estate planning attorney rather than a guess.
What this means if you’re planning a 1031 exchange
The sale or purchase of property sits right on Gaudy’s list of events that should prompt a trust review. A 1031 exchange is both at once. The replacement property has to end up correctly titled and reflected on the schedule of assets, whether it’s a building or a fractional interest. If you’re mapping out timelines, our summary of 1031 exchange rules and deadlines pairs naturally with a call to whoever drafted your plan. For the underlying case for having one, see why almost everyone needs a revocable living trust.
Watch: Why Most People Choose a Trust and Why You Must Keep It Updated with Jason Gaudy, Gaudy Law
Educational only. Not legal, tax, or investment advice. Jason Gaudy is licensed in California; rules vary by state. Consult your own advisors.