A living trust is one of the most effective estate planning tools available for protecting your assets, streamlining the transfer of property to your beneficiaries, and avoiding probate. Unlike a will, which only takes effect after your passing, a living trust can be used during your lifetime to manage your assets according to your instructions. However, to get the full benefits of a living trust, it’s important to plan carefully and avoid common mistakes.
Choosing the Right Trustee
The trustee is responsible for managing the trust’s assets in accordance with your instructions. They should be someone you trust completely, whether it’s a family member, friend, or professional fiduciary. You can be your own trustee during your lifetime. Our trusted attorneys at Bloom Legal Advisors assist clients in evaluating trustee candidates and understanding the legal and financial responsibilities associated with the role.
Funding the Trust Properly
Creating a trust document is only the first step. To make your trust effective, you must transfer ownership of your assets into the trust’s name, a process called funding the trust. This might include deeds for real estate, titles for vehicles, and account ownership changes for bank and investment accounts.
Failing to properly fund your trust is one of the most common estate planning mistakes. If assets remain in your personal name at the time of your death, they may still need to go through probate, defeating one of the primary purposes of the trust. Our estate planning attorneys can assist you with the retitling process to ensure your trust is fully funded.
Deciding Between Revocable and Irrevocable Trusts
A revocable living trust can be changed or revoked at any time while you are alive, making it a flexible option for most people. An irrevocable trust, on the other hand, cannot be easily modified once created, but it offers benefits such as asset protection from creditors and potential tax advantages. The right choice depends on your specific goals, whether that’s protecting assets, reducing estate taxes, or maintaining maximum control during your lifetime.
Integrating Your Trust With the Rest of Your Estate Plan
Your trust should work in harmony with other estate planning documents, such as your will, powers of attorney, and healthcare directives. For example, a “pour-over will” can be used to transfer any remaining assets into your trust at the time of your death.
At Bloom Legal Advisors, we ensure your living trust is customized, you understand the importance of properly funding your trust, and it is integrated with the rest of your estate plan so your wishes are honored and your loved ones are protected.
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