Common Mistakes In A Trust
The purpose of estate planning is to ensure all assets transfer to your specified heirs as efficiently as possible. Establishing a trust can be a complex process. Let’s look at a few mistakes that are commonly made when coming up with a trust.
Designating The Wrong Trustee
You will eventually need someone else to manage your assets and transactions following your death. Seniors often choose their kids to fill these roles, but various family dynamics can get in the way. In certain cases, it makes more sense to choose a close family friend instead.
The location of where a trustee lives can become a factor. Some states, such as New York and California, tax the income from trusts that are administered in their states. Certain states may offer better protection from creditors than others simply based on location.
Failing To Fund The Trust
The most costly mistake individuals make is failing to fund the trust. Once you have completed all necessary paperwork, you must follow up by retitling the appropriate assets in the name of the trust as instructed by your experienced attorney. Retitling may be quite simple when it comes to retirement accounts and insurance policies. Bank accounts and nonretirement investments accounts, however, require you to reach out to the financial institutions.
You may need to work with your attorney to properly transfer any real estate assets or business interests into the trust. Any assets that are not properly retitled may have to go through probate at this time. This can be quite a lengthy process overall.
Not Updating The Trust
It’s always a good idea to revisit and modify your trust as circumstances change. Events like death or divorce will require changes. This will not work with an irrevocable trust, however, as they generally cannot be modified or revoked.
It’s suggested to meet with your attorney every 3-5 years to address any changes. Tax laws can also change over time, eventually affecting how your assets will be treated. If you are considering making any updates or changes, schedule a meeting with your attorney as soon as possible.
Underestimating Finances
A common mistake individuals make is portioning out what they have rather than really assessing what their beneficiaries will need. Part of this process should include accounting for different scenarios.
Think about costs that your beneficiaries might incur, such a property bills. Most houses will require general upkeep, and these costs can be considerable for second residences, if applicable.
Source:
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- “4 Common Trust Mistakes” Schwab https://www.schwab.com/learn/story/4-common-trust-mistakes
Speak With Our Estate Planning Attorneys In Phoenix, Arizona Today
Estate planning is the right thing to do for the people you love. It’s another way to say “thank you” to those who love you. Some of the decisions are hard, but at Ogborne Law, we will help you navigate these difficult decisions.
Your Arizona estate planning attorney can help you select a will or trust or both. Your estate solution will work for you. You will have the peace of mind that comes with effective planning for the future. Call 602.343.1435 or contact Ogborne Law with questions.
