Trusts. It can be important to ensure that your wishes are fulfilled by the right people.
It is a document that legally guarantees where your assets will go when you pass. Yet not many Americans have one.
Only about 33% of Americans have a living trust. If you are not one of those people but are open to setting up a trust, then you need to contact Lake Mills attorneys.
What can they do for you? What do you need to know about managing a trust?
These are the things that you need to avoid.
When managing a trust, one of the first things that you need to do is ensure that the writing of the trust is very clear and specific. If you fail to do this, then complicated situations can arise. Even worse, it can mean that your assets go to certain people against your wishes.
For example, let’s say that you have a daughter as your primary beneficiary for this trust. Then, you put your grandson (her child) as the second beneficiary of the trust.
However, the daughter dies and you fail to update the terms of the trust. In this situation, if it is left unchecked, that means that the grandson cannot receive these assets until he is 18 years old.
So, what would happen? Well, if his father is still alive, he would have primary rights to the assets until your grandson comes of age.
This may not be a scenario that you want to happen. The father could be out of the picture, or you could simply think that the father will do bad things with the money.
Another example could be splitting a trust between multiple children. Let’s say you have two kids and allow them to split all of your assets.
However, one of your kids dies and now their half is left up for grabs. Do 100% of your assets now go to your other children or does half of the assets go to your child’s children?
These are things that you need to think about and scenarios that you need to account for when managing a trust.
Not Managing the Problem Child
So, when you are deciding who will be the beneficiaries of your trust, you have to consider a lot of factors. One of those factors should be how responsible the potential beneficiary is.
If they are someone that has an addiction or is just not good with money, giving them a large percentage of your assets could do them more harm than good. You could be aware of this but not know what else to do without leaving them off entirely.
Luckily, you do not have to go that route. However, you do have to plan this out.
One option that you have with a problem child is to make specific conditions for their situation. There are a few ways that you can go about this.
If they are someone that suffers from drug abuse, then you can have them submit to a drug test regularly to get access to your trust. Another route that you can take is to permanently pay them off through monthly payments rather than one large lump sum.
Going this route improves their chances of avoiding blowing through that money. You just need to make sure that this language is included in the estate plan.
Forgetting Taxes on Assets
When some people are trying to manage a trust, they may forget that some assets have different tax laws than others. This can be the case when they are in certain trusts too.
For example, if you give your life insurance to one child, that asset is tax-free. However, you give another asset to another child that has equal value. The catch with this one is that it has a 25% tax with it.
With that in mind, you essentially gave the child one asset that is 25% less valuable than the other one. You need to make sure you know the tax liabilities of each asset that you have.
One other solution in this scenario would be to put all of your assets in one trust and then have all of your beneficiaries split all of the assets equally.
Doing Everything Yourself
Some people think that because they know what they want to give to each beneficiary, they do not need the help of an attorney to create the documents for a living trust. This is where things can go horribly wrong.
You may be a smart person, but that does not mean that you can necessarily read and create legal documents well. This is a careful process and if you get any part of it wrong, it can result in a few negative actions.
The first is that it can disrupt your assets going to the right people, and if you really do it wrong, a judge can rule the documents not legally binding, and it results in invalidated trusts. It is best to stick with an experienced attorney in this situation unless you are an attorney yourself.
Hire Lake Mills Attorneys
These are some of the things that you need to know when it comes to managing a trust. Avoiding mistakes like doing everything yourself, unclear writing, or forgetting about tax implications can allow your trust to be passed down much more smoothly.
Do you need help managing a trust? Message these Lake Mills attorneys for a free consultation today.