Many Missouri residents use trusts as part of their estate planning decisions. A trust can be an excellent way to avoid probate, provide for minor or special-needs children and in some cases reduce estate taxes. However, there are some common mistakes that people make when planning their estate that should be avoided.
Estate plans should be reviewed periodically to ensure they meet the family’s current needs. As their children get older, parents might recognize that each of them have very different needs and create or amend a trust to take this into account. Trusts should also be reviewed to determine whether the date the children will receive their inheritance is appropriate. Some parents delay giving their children a large sum of money until they have reached a certain age or have achieved educational or career milestones. Estate planning documents should also be periodically reviewed to make sure the people who were appointed as guardians for minor or special-needs children are still appropriate and willing to take on the responsibility.
The trustee a parent chooses may need to refuse money to children who are beneficiaries based on the terms of the trust. Selecting a family member as the trustee might cause tension in an otherwise loving relationship. In some cases, hiring a corporate trustee or a trusted non-family member might be a better option.
Before creating and funding a trust, parents should contact an attorney that has experience in estate planning matters. The attorney can help ensure that the trust is prepared properly. When a client has a child with special needs, the attorney can help set up a special trust to meet the child’s needs without affecting eligibility for government assistance.
Source: CNBC, “Trust bust: Steer clear of the 8 biggest estate-planning mistakes”, Barry Glassman, Oct. 22, 2014