Don’t make these mistakes when setting up a trust fund.
Establishing a Trust Fund for your child can be an excellent way to guarantee that your child receives financial support after your death or during important times of their life. Trust Funds allow parents to decide how much to leave their children when the child receives the funds and whether any requirements must be met beforehand. However, parents make some mistakes when setting up a Trust Fund. When you partner with The Millman Law Group to create an estate plan and trusts, you can be sure to avoid the following mistakes that may derail your goals for your children’s future.
Selecting the Wrong Trustee
Choosing the wrong Trustee is a mistake parents often make when setting up a trust fund. It’s an honest mistake and often comes from rushing into the decision because you don’t want to dwell on the future when you’re not there for your children. It may feel easiest to choose a family member because you can assume they have your children’s best interests at heart. However, you need to think about some practical issues that may pop up and influence your Trustee’s ability to manage the Trust. Consider the following factors:
- The Trustee’s health
- How far they live from you and your family
- How old they are
- How old they will be when your children gain control of the Trust
- Can you trust them with serious responsibilities?
- Have they shown good judgment in the past?
If you select the wrong Trustee, many complicated issues can result, and you won’t be able to fix things when they go wrong.
Not Being Clear About the Goals of the Trust
If you do not know your goals with the Trust Fund, you may make errors that result in your young adult children having access to money and assets that can do more harm than good. Consider carefully when and how your children should gain access to the fund. Ask yourself questions such as:
- Do you want your children to receive money every year? Every three years?
- Do you want them to receive money at a certain age?
- Do you want them to accomplish a life milestone or goal first?
To create the most beneficial plan, be thorough and thoughtful about how and when your children are to receive their Trust Fund money.
Failing to Include Asset Protection Provisions
A significant benefit of any Trust is the asset protection it offers if it is set up correctly. For example, including spendthrift provisions inside a Trust Fund can prevent beneficiaries from making financial mistakes that can result in substantial losses.
You can also set up a system that serves as a checks and balances system, and checking in on assets over time ensures they are protected in the long run.
Not Reviewing the Trust Fund Annually
Reviewing your Trust at least once per year is essential. Things change in life, and your estate plan must change with them. Having an outdated plan can be as bad as having no plan at all. When reviewing your Trust Fund plan, reassess the following:
- Your choice of Trustee
- Is every appropriate beneficiary included?
- Are there beneficiaries who should be removed?
- Have there been any births in the family that will influence your Trust?
- Have there been any deaths?
- Has your Trustee had a change in mental or physical health?
When you partner with your estate planning lawyer at The Millman Law Group to craft your estate plan and create a Trust Fund for your child, you can trust that we are here to support your goals. Our skilled attorneys will guide you through the process and recommend the most effective strategies for your asset management. Contact us today to get started and craft a Trust Fund for your child’s future.
Estate Planning Made Easy With Millman Law Group
Millman Law Group, PLLC is rare because it’s one of the only law firms that offer life planning in South Florida. From life care planning to the preparation of detailed estate plans, Millman Law Group has committed to serving Floridian elderly communities in Boca Raton, Palm Beach County, Ocean Ridge, Hillsboro Beach, and many other areas since 2018. Our dedicated team also specializes in special needs Trusts and catering to any age demographic because we know for certain it’s never too early to start preparing you and your family for your future. For the latest news in estate planning and elder care law, follow us on Facebook, Twitter, Linked In, and Pinterest. You can also contact us at 561-463-6480.