Do you currently have a trust or are you thinking about adding one to your estate plan? Were you aware that some trusts do fail? To begin, a trust is a legal document that you can place your assets in to be managed by a selected trustee for the benefit of the trust’s beneficiaries. There are two essential components to a trust. First, there is the trust itself, which is created through a legal document that identifies the purpose of the trust, the trustee of the trust and his or her powers, the beneficiaries of the trust, and the requirements for distributing the trust assets to the beneficiaries. The second component of the trust is the “corpus” of the trust, or, the sum of money, accounts or property placed into the trust.
Now the reason that many trusts fail is actually quite surprising. It is not the failure to properly establish the trust in the legal document, but many trusts may fail due to a lack of funding. Unbelievable as it seems, many people go through the process of hiring an attorney to set up their trust, but neglect to follow through on all the necessary next steps that must be taken to fund the trust after their trust is created.
In addition, often people want to utilize a trust in their estate planning to avoid probate and simplify the administration of their estate. If this is your goal, you need to ensure that all of your assets are placed into your trust. You can do this by retitling your current assets in the name of your trust and remembering to add any assets acquired later to the trust. If you fail to do so and some assets are left outside the trust, then your estate will probably need to be probated and the objective of avoiding probate through the use of the trust will not be satisfied.
Finally, you should work with an experienced Alabama estate planning attorney, who will not only help you establish your trust, but will help you understand how to properly fund your trust. He will also be sure that the trust that you are creating to meet your estate planning goals will actually satisfy those goals and will not fail.
At the end of the day, estate planning is not just for you. Instead, it is for the ones you love most. If we can answer any questions for you on putting this estate planning in place, please do not hesitate to let us know. For more information, please reach out to our office and schedule a time to meet.