- Cole Gorman
3 critical mistakes to avoid when setting up a trust
Estate planning is an area of law where people can easily get confused and overwhelmed. Add to this the fact that it can involve uncomfortable subject matter, and it can prove to be a much more challenging process than people anticipate. However, all this is not to say you should ignore or minimize the importance of having a comprehensive estate plan in place.
If you do not take estate planning seriously and spend some time crafting a satisfactory plan, you could be making some costly mistakes for which your loved ones could ultimately pay the price. For instance, in the context of a trust, there are missteps that could make your trust planning ineffective.
Failing to fund the trust-Deciding to set up a living trust can a be a great decision. However, if you never transfer any property into that trust, then the trust can be useless. As this FindLaw article suggests, be sure you follow through with procedures to fund the trust so that your loved ones can benefit from it.
Setting up the wrong type of trust-Trusts can accomplish various planning goals, depending on the type of trust you establish; they are not all created equal. As such, you should think carefully about who the trust is for, what the tax implications might be and whether you want to maintain control over the trust in your lifetime. These and other factors can help you find the trust that best suits your needs and goals.
Making the wrong rules-Administering a trust can be enormously complicated if the person who made the trust set confusing or unwise rules. You might want to be cautious when deciding when and how much of the trust to release, as well as who you want to have as the trustee(s) to avoid any fights or unwise spending.
To avoid these and other mistakes when it comes to establishing a trust, you can consult an attorney familiar with estate planning processes and laws. With legal guidance, you can be confident that your trusts — and the other elements of your estate plan — do what you want them to do.