One of the most common additions to a comprehensive estate plan is a trust. Trusts have increased in popularity over the last several decades in large part because of the numerous and varied goals they can help achieve within an estate plan. If you are planning, or contemplating, the addition of a trust to your estate plan, it is in your best interest to discuss your options with your New York estate planning attorney first to ensure that you choose the right type of trust for your intended purpose. It is also best to work closely with your estate planning attorney when the times comes to actually set up your trust agreement. In the meantime, however, you may wish to review the following “Tips for setting up a trust” in anticipation of your meeting with your attorney.
- Define your trust purpose. This may seem like an obvious tip; however, people have a tendency to be somewhat vague when stating the purpose of their trust. The more specifically and narrowly you are able to define your trust purpose, the better your odds are of creating a successful trust.
- Be sure you are creating the right type of trust for your trust purpose. Once your trust purpose has been defined, you can start deciding which type of trust will best serve that purpose. For example, if your trust purpose is to ensure that your spouse has control of your assets in the event of your incapacity, a revocable living trust is probably your best choice. On the other hand, if your trust purpose is to shield your assets then you must use an irrevocable trust. Finally, if you do not plan to activate the trust during your lifetime, a testamentary trust may be your best choice whereas if you plan to put the trust to use while you are alive you will need a living trust.
- Choose your Trustee carefully. One of the most common, and costly, mistakes people make when setting up a trust is to not take the time needed to truly contemplate the position of Trustee of the trust. Instead, people simply appoint a spouse, family member, or close friend based solely on convenience and the fact that they “trust” the individual. Trusting your Trustee is, indeed, important; however, the wide variety of duties and responsibilities your Trustee will make is crucial for you to pick someone with the experience and skills required to successfully perform the job of Trustee.
- Always contemplate the need for a successor Trustee. One of the fastest ways for your trust to end up the subject of litigation is for the trust to end up without a Trustee. That happens when something happens to the original Trustee, such as incapacity or death, and the trust lacks directions for appointing a successor Trustee. Because a trust must have a Trustee to function, the trust winds up embroiled in litigation.
- Consider funding options before choosing one. A trust can be funded using just about any assets you have, including cash, securities, real or personal property, even the proceeds of a life insurance policy. Make sure that you use the right type of assets to best fulfill the trust purpose.
By taking these tips into account, and working closely with a New York estate planning attorney, the trust you create stands a much greater chance of being successful and fulfilling the trust purpose.
For more information, please download our FREE estate planning worksheet. If you have questions or concerns relating to setting up a trust, contact the experienced estate planning attorneys at the Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.