Are you considering whether to add a trust to your estate plan? What is your goal for adding a trust to your estate plan? Are you familiar with what they can do for your estate and thus are considered one of the most useful estate planning tools: They can keep an estate out of probate. They can be utilized for tax planning purposes. They can be used as a vehicle for long-term care planning by structuring a person’s assets in a way that makes him or her eligible for Medicaid to cover the expense of a nursing home. On the other hand, though, are you familiar with why trusts may fail? We would like to share a few of the reasons why a trust may fail.
1. Your trust is created, but not funded. When you have created your trust and signed it, it is still not finished. In fact, it is not even worth anything until it is funded! To fund your trust all of the assets described in your trust need to be moved into your trust. The beneficiaries of your trust will probably find that they will receive nothing from the trust if your assets are not moved into the trust.
What does it mean to move your assets into your trust? It means that your trust must hold title to all of your assets. This will involve changing the name on the deed on your home, the title to cars, boats, RV’s, the ownership of bank accounts and stock certificates intended to be transferred into your trust. Funding a trust is definitely a critical step in properly establishing a trust, but often it is one that may be overlooked.
2. Your trust is not updated to reflect life changes. Once you have created and funded your trust, do not place it in a drawer or safety deposit box and forget it. It will need to be updated, for example: If there are any significant life changes, such as the birth or death of a loved one, a divorce or a remarriage, or even the death of your trustor, your trust should be updated. If you purchase new assets, they should be titled into your trust.
3. Your trust is not updated to reflect current law. You know beneficiaries may change, but did you know the laws on trust and estates can change? In fact, your trust may have been drafted under one set of laws, but there may be new or updated laws at the time of your passing. These new laws may have the potential to invalidate portions of your trust.
The best solution to keeping your estate plan current with federal and state laws would be to work with a good estate planning attorney. She can provide periodic bulletins regarding significant changes in the law, which can alert you to the need to have your trust revised. More importantly, anyone who has a trust should have it periodically reviewed by an estate planning attorney to assure that it is supported by current law.
At Britton G. Swank, P.A., our mission is to guide you in the right direction to help you provide for yourself and your loved ones no matter what the future holds. We want to help you control the assets you have, leave them to people and causes you care about, when you want, in the way you want. We can help you take care of yourself and those you love in the event of disability due to illness, injury or old age. No matter what risks unfold, we can help give you the comfort of knowing you are prepared. We want you to feel good about your future and the future of your loved ones. We encourage you to contact us and schedule a meeting.