A trust is an estate planning tool that provides various benefits, such as automatically transferring assets to beneficiaries and avoiding probate. Our estate planning attorney in Oviedo, FL, has helped families throughout Central Florida create and administer trusts for over 20 years. We’ve also helped beneficiaries, trustees, and estate personal representatives navigate the complications of adequately executing a trust due to mistakes and oversights when the trust was established. We share these common mistakes and how to avoid them below:
Not Understanding The Purpose of a Trust
The first mistake people make when establishing a trust is not understanding its purpose and whether it’s an effective estate planning tool for your estate. Trusts allow you to automatically pass assets and possessions to your desired beneficiaries by utilizing a trustee, who oversees the distribution of these assets to the designated individuals. Revocable living trusts (the most common kind) go into effect once created and can be altered while you’re alive. After you pass away, your trustee manages the trust for you and distributes the assets to the designated beneficiaries. Creating a trust can be complicated, which is why it’s essential to work with an experienced estate planning attorney in Oviedo, FL, like Peppler Law. We’ll review every aspect of your estate and determine the best estate planning tools to ensure your property, possessions, and assets are distributed to your beneficiaries as desired.
Not Funding the Trust
The next step is to transfer ownership of the desired assets into the trust, referred to as “funding” it. Funding your trust is a crucial step that, if not completed, voids it. Every asset will have specific requirements for transferring ownership into the trust. For some assets, transferring ownership may be as simple as designating the trust as the beneficiary for bank accounts, deposits, and securities. Other assets, such as real estate property, may have different requirements for being placed in a trust.
Selecting the Wrong Trustee
Your trustee oversees asset distribution at the designated time. Selecting a trustworthy, responsible, and neutral person to fulfill this role is vital. If you don’t, you risk mismanagement, theft, and family conflict. You’ll also want to choose someone with the financial literacy and acumen to help ensure the trust is managed correctly. A suitable trustee is responsible, goal-oriented, financially stable, and organized. Trusts need ongoing maintenance, so you’ll need to select a trustee who can commit the necessary time to manage it. You should also consider your intended trustee’s health status and age to ensure they can carry out their duties long-term.
Using Vague Terminology
Using vague terms and language can make your trust ineffective. When you work with an estate planning attorney in Oviedo, FL, we’ll ensure the language drafted in your trust is transparent so there’s no confusion when it’s time to distribute your assets. You must be specific about who will receive each asset and any requirements they must fulfill to receive them, such as graduating college, securing full-time employment, or starting a family. You’ll also want to stipulate how the funds will be distributed and their suitable uses.
Failing to Review the Trust
Another common mistake people make when establishing a trust is failing to review or modify it. Trusts should be reviewed every few years and altered when there are changes in marital status or family relationships. You’ll also want to review the assets in the trust and determine whether updates should be made.
Avoid Estate Planning Mistakes with Peppler Law, P.A.
The biggest mistake we see people make when establishing a trust is failing to work with an experienced estate planning attorney to help you create and manage your trust. Our team at Peppler Law, P.A., will help you create a comprehensive estate plan, including whether a trust is a suitable option for your estate. Contact our office or message us online for more information on making your estate plan.
