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Do not let these aspects of trusts trip you up

On Behalf of | Feb 14, 2019 | Trusts & Trust Administration |

A trust is a complex legal tool, but it is one that many people in New Jersey find to be extremely valuable. After all, a trust allows a person to pass assets on to loved ones without having to go through the expensive and time-consuming probate process. However, do not make the mistake of assuming trust planning is one-and-done.

First, simply signing off on the trust does not matter if the trust is never funded. Assets must be titled in the name of the trust. Assets left out of the trust at the time of one’s death could be subject to probate and the laws of intestate secession without a will.

For this reason, it can be prudent to establish both a trust and a pour-over will. A pour-over will collects all the assets of the deceased not left in the trust, and then transfers those assets to the trust. In this manner, a person can ensure their assets are going to their intended beneficiaries when the time comes.

Similarly, a trust should be periodically reviewed. Children grow up, marry and have children of their own. And, significant others pass away.

What it comes down to is that a person named as a beneficiary when one first executed the trust may no longer be an appropriate beneficiary or may have needs that are very different than those that existed when the trust was executed. Revisiting the trust, and updating it accordingly is important.

Finally, it is important to select an appropriate trustee. It might seem at first glance that a close relative, such as a sibling, would be a good choice. However, keep in mind that even if one’s siblings are qualified to be a trustee, a trustee must enforce the provisions of trust and act in the trusts’ best interests, even if that puts the trustee into an uncomfortable position. For this reason, some people choose to hire a corporate trustee instead of selecting a relative or friend to fulfill this role. An impartial third party may be better able to keep the peace when disputes regarding the trust arise.

As this shows, trusts — even relatively simple trusts — still must be handled with care. It is important to fund them appropriately, to select the right trustee and to review the trust periodically.