Estate planning is a topic that is often ignored by many people, even though it plays a great role in the financial future of a person and their family. It is not complicated to set up a living trust. However, without proper guidance, there are certainly a lot of issues that can be overlooked.
Setting up a living trust is only the first step. Making sure that you have the proper plan laid out is another story. How do you make sure your living trust is adequate, and that your intentions will become true? Here are the most common living trust mistakes that you need to avoid to ensure the best for your loved ones.
Three most common living trust mistakes:
Delay setting up a living trust
No one likes to discuss the possibility of their own death. However, we all have matters to be taken care of in the worst cases. Some have spouses, children, and other loved ones to support. Others have mortgage payments, funeral expenses, medical expenses, or other financial obligations. In certain cases, some people want to pass on their wealth to certain charities of their choice.
Without a will or a living trust, your wealth may not be inherited or managed the way you want. In extreme cases, a person can become incapable of managing their assets due to a sudden illness or accident. Without proper instructions, their family or loved ones can be stranded without the means to pay for the medical cost and living expenses.
Having a proper estate plan set up is the only way to ensure that your business and family matters will be taken care of, even after you are no longer capable of doing so.
Not adding your assets into a living trust
Even after a living trust is set up, it will not serve any purpose if you don’t transfer your assets into it.
Unlike a will, when an asset is transferred into a living trust, it remains under your control and ownership, unless specified otherwise. The assets can only be transferred after you are no longer able to manage them, or when certain events that you specified have occurred.
With a living trust, your assets can safely grow under your control. There is no reason to delay adding assets to the trust and make sure your assets will be managed and transferred the way you wanted.
Not updating your estate plan
Sometimes life happens not the way we planned.
When you first map out your estate plan, you may only think of your family situations then. Along the way, you may have a new grandchild, or a divorce occurred in your family. Sometimes the designated contingent trustee may no longer be fit to manage the assets due to medical conditions, life changes, or any personal reasons.
Such life events may call for a change in the way your assets should be managed and distributed. This is why you need to regularly review and update your living trust.
How to prevent living trust mistakes
Having a proper living trust is the best way to ensure protection and support for yourself and your loved ones. The topic doesn’t have to be complicated. With the help and guidane from a living trust expert, you can set up and maintain a living trust while avoiding the common pitfalls.
If you have any question or need assistance with the setup or maintenance of a living trust, contact a Heritage Living Trust representative today.
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