A well-funded and prepared living trust offers many benefits both to the heirs of the estate and to the estate itself. From the protection of assets in case of incapacitation to avoiding court interferences, a living trust is one treasured document that you should consider when creating an estate plan. Nonetheless, many people tend to make mistakes that often limit the ability of the trust from serving them as intended. In the following article, we’ll look at 5 of the most common mistakes:
1. Poorly Prepared Documents
Many people try to save a few bucks by using do-it-yourself or online forms for their trusts and choosing the lawyer that offers them the lowest price. Poorly prepared documents can not only waste your money, but also make your trust not work the way it’s intended to. Worse, the trust document may lack the context required by your state, leaving you with an invalid plan.
It’s, therefore, best to find a local, experienced estate planning lawyer, who can offer you valuable counsel and provide you with proper, well-written documents. While finding the right attorney can take some time, it will be worth it in the long run.
2. Failure to Fund the Trust
Estate planning trusts have several limitations, the most important of which is that the trust can only control the assets placed in it which means that you can have the best documents around for your trust to protect your assets, but it won’t control anything until you fund it.
Some people forget to finish the funding process, and certain assets can end up undergoing probate. Isn’t avoiding probate one of the reasons you wanted a living trust in the first place? As such, make sure you fund your living trust appropriately so that it can do its job well.
3. Failure to Review or Read the Trust Documents
In many cases, people create a trust and skip reading the final document to confirm if it’s how they want it. You should always read and review your documents, so that if you have trouble understanding any part of it, your can ask your lawyer of the paralegal to explain it to you.
4. Naming the Wrong Trustee
Since the individual creating a living trust is the primary administrator, they should name the right successor trustee in the event of their death. The successor trustee needs to follow the rules and instructions stipulated in the trust, but if they don’t, your trust won’t work as you intended. That’s why it’s important to consider all your choices and choose your trustee wisely.
Examine the complexities of your trust and its duration (for instance if providing for a child with special needs), along with the abilities and personalities of all your candidates, how busy they are with their affairs, where they live, etc. Don’t forget that being older doesn’t necessarily make a person wiser.
5. Not Updating the Trust
The accuracy of the trust is crucial since it’s a reflection of your family, personal, and financial situations at the point of its creation. Of course, these things will change over time, and your trust needs to reflect these changes. It’s wise to review your trust annually or so and to have it updated whenever necessary.
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Misha is an estate planning attorney at Speedwell Law, PLLC. If you would like assistance in setting up your own estate plan, he can be reached at (703) 553-2577 or firstname.lastname@example.org.
This post, including any of its contents or links, is not intended to provide you with legal advice. It provides personal perspectives on legal news and developments. Reading this post, leaving a comment, or communicating with its author by email or over the Internet does not create any attorney-client relationship.