MYTH #1 “I Have a Living Trust, I’m Done”
TRUTH: Life is not static. Your situation changes over time. Children get older and marry. Sometimes they “un-marry.” Your financial situation will change over time. The people you chose to act as successor trustees will age and perhaps not be able to help you. The law changes (often!) You may move to a different state. You may remarry. Not reviewing your trust on a regular basis is one of the biggest mistakes you can make. If any of these changes are note addressed in your trust, the major purposes of your trust will not be accomplished.
MYTH #2 “My Life Insurance Passes Outside of Probate, I Don’t Need to Name the Trust as the Beneficiary”
TRUTH: While avoiding the time, cost, and publicity — the overall hassle of probate — is a legitimate goal of creating a Living Trust, these are not the only goals. For example, a trust can be used to protect the trust assets for the benefit of a surviving spouse and children or minimize estate taxes. If the trust is not listed as the beneficiary, neither of these goals are accomplished leaving the trust open to attack by the government and creditors or predators.
MYTH #3 “Then I Should Name the Trust as the Beneficiary of My Retirement Accounts”
TRUTH: On the other hand, your Living Trust should not own or necessarily be the beneficiary of every asset. You have contributed to your retirement accounts money which you were then able to deduct from your income taxes that year. Thus, there are special rules that apply when money comes out of these accounts. Extra care is needed when deciding what to do with the accounts themselves and what to do with beneficiary designations.
MYTH #4 “I Recently Refinanced My House, They Took the House out of the Trust and Promised to Put it Back”
TRUTH: Just as the trust documents need to be reviewed on a regular and on-going basis, the assets “funded” to the trust must also be reviewed. Idaho Estate Planning has an annual review program to help you do just that.
MYTH #5 “Can’t I just get my Living Trust off the Internet?”
TRUTH: While you may legally create your own trust, there is a vast body of law you need to know to ensure that your trust does what you want it to do. For example, because of the complexities mentioned above concerning retirement accounts, most people will not be able to appropriately handle the funding. While a number of attorneys claim to “do living trusts,” look for an attorney who either specializes or focuses his or her practice on trusts and estate planning. The Idaho Estate Planning team has combined experience of more than fifty years working with trusts and estate planning. |
