I am often asked by clients considering changes to their estate planning whether it is better to start over from scratch, or to modify what is already in place. As with most things, it depends.
First, a few definitions:
When someone has a Trust, a change to the trust may take the form of either an “amendment” or a “restatement.” Typically, amendments modify specific parts of the underlying trust, while a restatement modifies the whole trust but without actually revoking the underlying trust and starting over.
Similarly, a Last Will and Testament may be changed via the execution of a “codicil,” (which is equivalent to an amendment, for Wills) or by creating a whole new Last Will and Testament which revokes the prior Last Will and Testament and starts fresh.
There are good reasons for each approach.
Whether executing a new Will or a codicil (when making changes to a Last Will and Testament), or a new trust, a restatement, or an amendment (when making changes to an estate plan involving a trust), the same formalities of execution must be observed. This means that, no matter your choice, the document must be properly signed, witnessed, and notarized. Doing an amendment or a codicil or a restatement does not afford you the ability to cut any corners, in that regard. Note that writing changes onto the face of the underlying document is not only insufficient, but depending upon what you do, you might actually wind up invalidating the whole document.
When you create a new Will, or a new Trust, or a Restatement of an old Trust, one benefit is simplicity. It is much easier for a person to read and interpret a single Will as opposed to a Will plus multiple codicils, each of which may make changes to the original Will and/or prior codicils. Another benefit is privacy. Imagine this: During a time where things are bad, you write a Will that disinherits your son. Years pass, and you forgive him. You write a codicil to your Will, adding him back into the estate plan. When you die, your Will and codicil are found and are administered. He’s going to be able to see that there was a period of time where you had disinherited him. Comparatively, had you done a new Will, expressly revoking the prior Will, then upon your passing the new Will is administered and he never even sees the prior one.
Sometimes, clients will tell me that they wish to create a codicil, rather than a new Will, simply because they assume that it is cheaper to do it that way. That’s not necessarily so: when preparing a codicil (or an amendment, for a trust), the attorney must craft a document that fits within the moving parts of the existing estate plan. This can be much trickier, and therefore more expensive, than just starting over from scratch.
Before creating a new trust, the individual should consider the work that will be involved in retitling the assets, taking them out of the old trust and transferring them into the new one. That’s where restatements come in – a restatement is like a full-body makeover for a trust; it may change most everything about the trust, but depending upon the manner in which it is drafted, accounts held in the name of the original trust will not necessarily have to be retitled, nor will people need to look back to the terms of the original trust document.
