Common Mistakes When Creating a Trust
A trust may seem like a fairly straight-forward document; simple errors can interfere and potentially invalidate what would have otherwise been a smooth transfer of property and assets. We have seen how mistakes can be made regarding a trust. Klenk Law encourages anyone considering updating or creating a trust to speak with a lawyer so their best interests can be protected. Here are a few of the most common mistakes that people can make, particularly if they are not receiving guidance from a lawyer for revocable living trusts in New Jersey:
Common Mistakes When Creating a Trust
#1 Failing to Show Intention
The courts are protective of individual property rights. So enough affirmative proof of intent must be provided. The person granting assets has to show that this request is intentional and specific. If this is not done, then the trust may not be considered a valid document.
#2 Failure to Fund the Trust
A trust cannot be created unless the property changes hands, referred to as “funding the trust.” Failing to transfer the property or failing to place it into the trust may result in the trust not having sufficient assets to carry out your wishes. The most common circumstances where a trust has failed were funding issues. This is where a person did not transfer the asset or deliver it into a proper trust.
#3 Failing to Provide Instruction Beyond Precatory Wording
Ensuring that the wording you use in your estate plan documents can make the difference between huge issues arising later on and having your assets dealt with smoothly and as you so wish. “Precatory” language is a wish or preference but does not establish affirmative duty or legal obligation. Precatory wording can be interpreted as more of a suggestion and less of an instruction. Being as direct and explicit as possible when writing your instructions helps eliminate confusion and increases the chances that your wishes will be honored.
#4 Failing to List Beneficiaries
When writing your trust, it is your beneficiaries or charities that are going to benefit ultimately. Specificity is required. This ensures your chosen loved ones or entities receive the assets. Planning can make sure names are not forgotten, misspelled, or inaccurate information is provided. A viable trust names beneficiaries and strict duties for the trustee to carry out.
We hope this article helped point out Common Mistakes When Creating a Trust. For more information, please reach out to schedule a free consult. Revocable Trusts, It’s What We Do!
