Planning for the future and safeguarding your family's financial well-being is no small feat, especially when you need a trust in Virginia. As we've discussed in our previous blog, while trusts are an effective estate planning tool, they require thoughtful consideration and precise execution to serve their intended purpose.
Yet, mistakes can be surprisingly easy to make. In this blog post, trust attorneys at McCarthy & Akers share seven common mistakes Virginians often make with trusts. We’ll also provide insights on how to avoid these mistakes, ensuring your trust operates just as you've envisioned.
Whether you need to create a trust or a review of an existing one, our team at McCarthy & Akers offers the experience and dedication to ensure that your trust in Virginia is robust, effective, and tailored to your unique situation. Let us go to work for you!
Common Trust Mistakes
Creating and maintaining a trust in Virginia is a multifaceted process, and even small mistakes can have serious consequences. Here are seven common trust mistakes to avoid:
1. Inadequately Drafted Trust Documents
The foundation of a trust is its legal document, which lays out key elements such as the duties of the trustee, the rights of beneficiaries, and the guidelines for asset management and distribution. It is imperative that this document is drafted and signed in compliance with Virginia's trust laws. A document that falls short in clarity or legality can lead to disputes and could lead to your wishes not being carried out as desired.
2. Overlooking the Funding of the Trust
Creating a trust is just the first step; you must also transfer assets into it, known as funding the trust. Unfunded, the trust fails to serve its purpose, rendering any detailed planning useless. This oversight can result in your estate going through probate, contrary to the primary aim of creating a trust.
3. Omitting a Successor Trustee
Not naming a successor trustee can result in complications if the original trustee can no longer serve due to incapacity, death, or unwillingness. This oversight can lead to legal hurdles, delays in trust administration, and potential court involvement to appoint a new trustee.
4. Neglecting Timely Updates to the Trust
Changes in life, such as marriages, the birth of children, or fluctuations in assets, necessitate timely trust updates. A trust that doesn’t reflect your current situation may not only become ineffective but could also lead to unintended beneficiaries or asset distributions.
5. Poor Communication with Your Trustee
Regular communication with your trustee ensures they understand and can implement your wishes accurately. Miscommunication may result in the mismanagement of assets or a failure to adhere to the specific needs of beneficiaries, defeating the trust's purpose.
6. Failing to Include All Assets in the Trust
This mistake can lead to significant parts of the estate being left outside the trust's protection and control, possibly subject to probate or unintended distribution. It is a common oversight, especially when assets are acquired after the trust is established or if there's a diverse and complex asset portfolio.
7. Disregarding Contingency Planning
Failing to account for potential changes or contingencies in a trust document is another common mistake. This includes not considering the possibility of beneficiaries predeceasing the grantor, beneficiaries developing special needs, or changes in marital status. Without plans for these contingencies, a trust may not function as intended under changed circumstances, leading to confusion, legal challenges, or unintended asset distributions.
How to Avoid These Common Trust Mistakes
To effectively avoid these common mistakes and ensure your trust operates exactly as you intend, follow these steps.
Work with Experienced Trust Attorneys
First and foremost, partner with skilled trust attorneys in Virginia to create a trust document tailored to your unique needs. Their experience in state legal requirements and complex estate planning ensures your trust is both compliant and robust.
Fund the Trust Promptly
Immediately funding the trust after its establishment ensures that your assets are under the protection and terms of the trust. Timely funding avoids the pitfalls of an unfunded trust and secures your assets' intended distribution.
Proactively Designate a Successor Trustee
Appoint a reliable successor trustee ready to step in if needed. This foresight prevents disruptions in trust administration and legal complexities. Discuss the trust’s details with potential successors to ensure they're fully prepared for their role.
Regularly Review and Update Your Trust Document
Update your trust document to reflect changes in your life, like new family members, asset changes, or revised wishes. These updates, ideally reviewed with legal counsel, help your trust stay relevant and effective.
Maintain Open Communication with Your Trustee
Communicate regularly and openly with your trustee about your goals and trust operations. This is essential for ensuring that your trust is managed in accordance with your wishes.
Thoroughly Account for All Assets in the Trust
Make a comprehensive list of all assets, including the less obvious ones like digital assets or business interests, to be included in your trust. Update this inventory as your asset portfolio evolves to ensure nothing is left unprotected.
Include Contingency Plans in Your Trust
Include contingency plans in your trust to account for possible future changes, such as the early passing of a beneficiary or significant life events. Regularly review and update your trust with legal guidance to ensure that it always aligns with your intentions under any circumstance.
By avoiding these seven common trust mistakes, you can ensure that your trust is properly managed and that your wishes are carried out. If you have any questions about trusts or how to avoid these common trust mistakes, consult with an experienced trust attorney.
Avoid Common Trust Mistakes in Virginia with McCarthy & Akers
If you're considering setting up a trust in Virginia, it's crucial to avoid common mistakes that could compromise your estate's future. No need to search online for “estate planning attorneys near me” or “trust attorneys near me.” The experienced trust attorneys at McCarthy & Akers can guide you through the intricacies of trust formation and estate planning, ensuring that your assets are protected and your wishes are precisely executed.
Need guidance on navigating Virginia’s trust laws? We’re here for you. Reach out to us at (540) 722-2181 or connect with us online. Our team's extensive experience in estate planning means you can trust us to handle your most significant decisions with care and precision.
With offices in Strasburg, Woodstock, Front Royal, Winchester, Manassas, and Warrenton, we're always nearby and ready to help. Choosing McCarthy & Akers means choosing peace of mind for your estate planning needs. Let us go to work for you!
And before you go, grab our exclusive guide, "3 Most Common Threats to Your Estate and Your Family's Future." Download your copy here.
Copyright © 2023. McCarthy & Akers, PLC. All rights reserved.
The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country, or other appropriate licensing jurisdiction.
McCarthy & Akers, PLC
302 W Boscawen St.
Winchester, VA 22601