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Common Mistakes Made with Living Trusts

A well-prepared and funded living trust provides numerous benefits to the estate as well as the heirs of that estate. From avoiding court interferences to protecting one’s assets during incapacitation, a trust is a treasured document to consider when creating an estate plan. However, estate planning trusts in San Diego are not without their faults. When one is created improperly, they could be prevented from benefiting anyone.

Poorly Prepared Trust Documents

Estate planning trusts established in San Diego are best off being set up by an attorney. This is because an estate planning attorney understands the local laws and proper wording for trust documents. Those that attempt to save money by using online document preparation or DIY websites will find that their trust documents lack the particular context required by their state.

Finding the right attorney to prepare the documents is the only way to ensure a testator’s estate is safe.

Not Reviewing or Reading Trust Documents

All too often people create a trust and then never read the final document to ensure it is what they want. Clients should always review their documents, and if there is wording they do not understand, their attorney can clarify for them.

Failing to Fund the Trust

Estate planning trusts in San Diego have limited powers. The most particular limitation is that a trust can only control assets placed in the trust. The best documentation in the world will not protect one’s assets. Instead, those assets must be transferred into the trust (funded to the trust) for protection. Often people will create their estate plan, set up a trust, and then never transfer property into it.

Selecting the Wrong Trustee

The individual creating the trust is the primary administrator, but they must name a successor trustee in the event of their death. A successor trustee is required to follow all rules in the trust, but that does not mean that they will. When selecting a trustee, individuals should consider their choices carefully. While a family member seems like the best option, if that family member is irresponsible, they may handle assets improperly.

Also, the more complex the trust, the more necessary it is for a trustee that is a professional instead of a family member. For example, a trust set up to protect a child with special needs requires a professional that understands the complexities of these types of trusts and knows how to administer it without harming the child’s chances for government benefits.

Not Keeping the Trust Current

A trust is only as good as the accuracy of it. A trust reflects a person’s personal assets. Therefore, all new assets must be added to the trust for protection. If someone creates an estate but purchases a home later, they must add the home to the trust later to ensure the documents are accurate. Testators should review their trust annually to ensure they are accurate.

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