Creating a trust can be a wise decision for your family’s financial future. This tool allows you to protect your assets from probate and have a hand in distributing your assets even after you are gone.
However, a trust is only as effective as its funding. If you have taken the critical step of establishing a trust, you must ensure it is properly funded to serve its purpose. The process can be complex, and without proper knowledge and guidance, even minor errors can render your trust ineffective. Here are three common pitfalls to watch out for after establishing a trust.
Mistake #1: Failing to transfer all necessary assets
When creating a trust, you probably have a clear vision of which assets to include. Yet, it can be easy to overlook some crucial assets, such as your home or valuable investments. This oversight can leave your possessions to probate, leading to unnecessary costs, delays and potential legal complications for your beneficiaries. Such mistakes may undermine the very purpose of setting up your trust in the first place.
Mistake #2: Incorrect titling of assets
Even if you remember transferring your properties into your trust, you may still expose your loved ones to legal complications if you do not do proper titling. For instance, if you have transferred your family home into your trust, but the deed still lists you as the owner, your house may end up in probate.
Mistake #3: Procrastinating on funding
You might think you have plenty of time to transfer your assets, but life is unpredictable, and unexpected events can derail your plans. If you become incapacitated or pass away before funding your trust, your family may need to navigate a complex and time-consuming legal process to access the assets you want to leave to them.
Asset protection done right
Do not leave your family’s future to chance. By avoiding these common mistakes, you can ensure that your trust will protect your assets even when you are no longer here.