A trust can certainly be a useful tool when making an estate plan. You can use it to control how the money that you put into the trust is used in the future.
That said, it’s essential to carefully consider all of the steps you take when you make this trust. You don’t want to make any mistakes that will have serious consequences for your family. Three examples are listed below.
1. Failing to fund the trust
Just creating the basic documents that outline how you want the trust to work is not enough. You need to make sure that you transfer assets into that trust to fund it so that they can be distributed properly. People sometimes just put the documents aside and fail to take this next step.
2. Not considering all of the ramifications
Once you pass away, the trust is binding. You need to consider how future changes could alter that. For instance, an educational trust may say that the money can only be used for college tuition. However, what if your heir becomes ill or suffers an injury and can’t attend college?
3. Choosing the wrong trustee
The trustee is in charge of distributing the assets on behalf of the trust. It’s crucial to have the right person. They need to be honest and dependable, and they need to be able to financially grasp all of the complicated steps they may need to take. They also need to be willing to take on this duty.
If you are setting up a trust, you can see how important it is to understand the steps to take and the mistakes to avoid.