and Probate Law Firm
Mistakes Commonly Made with Living Trusts
As an experienced estate planning lawyer in Folsom, I often times work with clients who have attempted to create their own living trust. Creating a living trust can be a valuable component of estate planning, but there are common mistakes that individuals might make. Avoiding these errors can help ensure that your living trust functions as intended. Here are some common mistakes associated with living trusts:
- Incomplete Funding:
- Failure to Update:
- Life circumstances change, such as marriages, divorces, births, and deaths. Failing to update the living trust to reflect these changes can lead to unintended consequences.
- Choosing the Wrong Trustee:
- The trustee is responsible for managing the trust assets and distributing them according to the terms of the trust. Selecting an inappropriate or unqualified trustee can lead to mismanagement of assets.
- Lack of Professional Guidance:
- Drafting a living trust without seeking legal advice can result in errors and oversights. Consulting with an experienced estate planning attorney can help ensure that the trust is properly drafted and executed.
- Ignoring Tax Implications:
- While living trusts can offer some tax benefits, failing to consider tax implications during the creation of the trust may lead to missed opportunities for tax planning.
- Incorrectly Titling Assets:
- Assets must be properly titled in the name of the trust to be included. Failing to retitle assets can result in those assets going through probate.
- Not Funding the Trust During Lifetime:
- Some individuals set up a trust but delay funding it during their lifetime. For the trust to be effective, assets need to be transferred into it while the grantor is still alive.
- Overlooking Tangible Personal Property:
- Some people forget to address specific instructions for the distribution of tangible personal property within the trust, leading to potential disputes among beneficiaries.
- Not Considering Successor Beneficiaries:
- When naming beneficiaries in a living trust, it’s important to consider who will inherit if the primary beneficiary predeceases the grantor.
- Ignoring Digital Assets:
- With the increasing prevalence of digital assets, overlooking how these should be managed and distributed within the trust can be a common oversight.
- Lack of Understanding:
- Some individuals create a living trust without fully understanding its implications or how it works. It’s crucial to have a clear understanding of the trust’s provisions and implications.
- Forgetting to Review and Update:
- Life changes, and so should your estate plan. Failing to review and update your living trust periodically can lead to an outdated and ineffective plan.
To avoid these mistakes, it’s advisable to work with an experienced estate planning attorney in Folsom who can provide guidance tailored to your specific circumstances. Regularly reviewing and updating your living trust in response to life changes is a key aspect of effective estate planning. If you have any other questions about mistakes commonly made with living trusts, contact Thapar Law at 916-579-0605 or send us a message.
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