Creating a Trust & Five Common Mistakes

A trust is an important tool for protecting an estate. It protects your assets from probate, provides protections for your loved ones, and provides for your care if you become incapacitated in any way. 

However, if your trust isn’t properly prepared, it could end up doing more harm than good. In some cases, your trust could even be completely invalidated as if it never even existed. The best way to make sure your trust is handled the way you intended is to work with an estate planning professional who can help you avoid these common mistakes.

Choosing the Wrong Trustee

A trustee is a person who will be given the authority to handle the assets held in the trust. This includes distributing the assets and making sure the taxes are paid. The person you choose to appoint as the trustee should be someone that you can trust to carry out your wishes. They should also be capable of handling such responsibility. Consider choosing someone who is organized so that they won’t miss deadlines and financially savvy enough that they won’t mismanage the funds.

Insufficient Funding

Without the proper funding, a trust will struggle to provide for your loved ones. Certain assets need to be held by your trust in order to avoid probate and transfer to your beneficiaries how you intended. Without proper funding, the court can determine who gets assets and when.

Incomplete or Unclear Instructions

In order for your trust to function properly, there should be clear instructions on how it will be funded, how it will be managed, when the assets should be distributed, and to whom. Without clear and complete instructions, your own wishes may not be carried out the way you wanted. In some cases, those decisions could end up in the hands of the court. It’s always a good idea to discuss what you want with your loved ones as well as with your estate planning professional who can make sure it’s all properly documented.

Missing Beneficiaries

Many times people assume that assets will automatically transfer to their spouse or children. However, without proper instructions and documentation, this may not be the case. It is important to ensure that who you want your assets to go to is spelled out clearly and legally in your estate plan. 

Never reviewing and updating

Reviewing your trust and other estate planning documents periodically is essential. If your life circumstances change, such as getting married or divorced, adding another member to the family, or acquiring more assets, it is important to review your trust. Even if your life circumstances haven’t changed, it is still important to review your trust with an estate planning professional to ensure that any law and/or policy changes that have occurred do not affect you; or that if they do, that your trust gets updated to continue providing the needed protections.

A qualified estate planning attorney can help you create a trust that holds up and meets the needs of you and your loved ones. Having an improperly prepared trust can be as detrimental as not having an estate plan at all. If you have questions or want to get started creating a trust for your family, contact our California estate and trust planning lawyers at 800-244-8814 to schedule an appointment.

If you have any further questions about estate planning and strategies to shield your wealth, or if you’d like to have your current asset protection plan reviewed to make sure it still meets your needs, please contact us at one of our offices located throughout the state of California 800-244-8814 to set up a consultation.