Trusts are an essential tool in estate planning. They’re an outstanding way to ensure that your needs and wishes are met, while still protecting your assets from probate. It’s guaranteeing that those who rely on you will have their financial needs met. This can also include you, should you become disabled or otherwise unable to make your own decisions.
Unfortunately, there are a lot of mistakes that people make when setting up trusts, and if you don’t take the right steps, you can find that your trust doesn’t do what you need it to. In the worst situations, the wrong move can even invalidate your trust. Learn five common trust mistakes you must avoid, and how seeking help from an experienced trust and estate planning attorney can be essential.
Common Trust Mistakes
When you set up your trust, there are a number of steps you need to take. You need to take them in the right order, without overlooking details. One wrong step and you can find that your trust runs out of funds before it needs to. You may even find that it is invalidated entirely. You need to ensure that you avoid the most common trust mistakes, so your trust is solid from start to finish.
Things to Consider When Creating a Trust
The first thing you need to do when creating a trust is name the beneficiaries. These often include children and grandchildren, and the trust can be amended as they age to meet their evolving needs. You also need to review the trust regularly to ensure that the point when the beneficiaries will get their inheritance remains appropriate.
The trustee may in some cases be required to defer beneficiary payments. Make sure you select the right person to serve as trustee, to avoid undue tension in the family or among other relationships. It may be better to hire a professional trustee over a family member.
Mistakes to Avoid in Your Trust
The five most common mistakes to avoid when you set up your trust include:
- Failure to fund the trust: If you fail to fund the trust, there won’t be any money in there to deliver to the beneficiaries. You can’t set up a trust if there are no assets to put into it.
- Failing to clarify instructions: Your trust needs clear instructions for how it is to function, to whom funds should go, how payment should be made, and when.
- Not listing a beneficiary: Once again, the point of a trust is to benefit someone. If you don’t specify who that beneficiary is, the trust will just sit in limbo, unable to be accessed by anyone for any reason.
- Choosing the wrong trustee: Choosing the wrong trustee can be ruinous to your trust. It can create damage in formerly loving relationships and can lead to abuse of the trust.
- Ignoring the trust: After your trust is established, the job isn’t done. You need to review it and make periodic adjustments as necessary to ensure that it works the way you need when the time comes.
Call a Wills and Trust Attorney
If you need help establishing your estate plan in Montanan and avoiding common trust mistakes, a qualified estate planning attorney like Tanko Law can help. Call us today for a consultation about your needs.