4 Common Trust Mistakes
Trusts are terrific estate planning vehicles that provide many advantages to our clients. Our clients can protect their privacy, avoid probate, and lower their estate taxes with the right trust.
However, a trust is not a DIY project, even for the most sophisticated person. Many mistakes derail even a carefully created estate plan, leaving family members and their lawyers to pick up the pieces.
At Strategic Counsel Law Group, our Tampa estate planning lawyers are committed to creating the most effective estate planning solutions for our clients. We highlight four common trust mistakes we always seek to avoid when creating a trust for our clients.
Mistake #1: You Choose the Wrong Trust
Not all trusts are the same. At base, any trust involves a trustee who manages assets held in a trust for the benefit of named beneficiaries. But there are many types of trusts available, and each serves a different purpose. For example, if you want to provide for a disabled loved one, you will want a special needs trust. If you hope to continue to maintain control of assets, you will want a revocable trust.
When people create the wrong trust, they can lose out on tax savings and endanger the ability of their loved ones to access funds when they need them.
Mistake #2: You Name the Wrong Trustee
The trustee has enormous power, and you should select your trustee carefully. In many ways, the trustee is more important than the representative of your estate. Depending on your trust, the trustee could manage assets for decades, so you want someone who makes prudent investment decisions and follows your wishes.
A trustee should be professional, detailed, and trustworthy. They should also know when to get legal help not to violate their legal requirements.
Mistake #3: You Don’t Fund the Trust Adequately
Even when trust assets are invested, they might not grow fast enough to fund your objectives fully. For example, you might want to create a trust for your pet. But you only fund it with a couple of thousand dollars when your dog is just a puppy. Over the ensuing 10-15 years, a trust could easily run out of funds to care for your four-legged friend.
When meeting with an attorney, carefully review the goals of your trust and your assets. It might be that you need to put more assets in the trust than you originally anticipated.
Mistake #4: The Trust Contains Conflicting Terms
A trust does more than naming a trustee to manage assets. It also provides terms for the trustee to follow. These terms can relate to investment, sale, and distribution to beneficiaries. A poorly drafted trust might contain conflicting terms, making it impossible for the trustee to fulfill his duties. Admittedly, a judge can help resolve any conflict, but the judicial process is expensive.
Obtaining the Legal Help, You Need
Our Tampa trust attorneys have created many trusts for our clients over the years. We will walk you through selecting a proper trustee and consider funding requirements. Then we will draft a solid trust that will stand the test of time. Contact our firm today to learn more in a consultation.
