When you set up a trust, you likely want to have some control over what happens to the money. Instead of just passing that money on to the next generation through your will, you are going to fund the trust in advance. This way you can choose a specific purpose for it.
But there are cases in which a trust that you establish can outgrow its usefulness. This often happens when people do estate planning early. Early planning is wise because you can never predict your own passing, but it is also important to update that plan so that it is always current.
Education funds
For example, maybe you set up a trust when your first child was born, setting aside money to pay for their college tuition. But now your child has grown up and gotten a full-ride scholarship. They already have a college degree, and the trust is not needed. You may want to adjust it for a different purpose.
The passing of a beneficiary
In some cases, a trust can also become less useful because the intended beneficiary passes away. Maybe you set up an incentive trust to influence one of your family members to continue working, even after they get their inheritance. But they have health troubles and pass away before you do, so they never use the incentive trust at all. You may want to choose a new beneficiary or design a new trust entirely.
These are just two examples, but they show why it’s important to keep an eye on your estate plan and make necessary updates at the appropriate times.
