Pennsylvania residents who are creating an estate plan might want to use a living trust to keep the estate plan more private and avoid probate. A living trust can be a powerful tool in an estate plan, but there are some common mistakes that can mean beneficiaries are unable to take advantage of its benefits.
One of the most common errors is failing to fund the trust. Setting up a living trust does not stop with creating trust documents. Car titles and real estate deeds must be changed so that they are in the name of the trust. For various types of accounts, most financial institutions will have paperwork that must be completed to transfer the accounts into the trust. Without taking these steps, the assets may go through the public process of probate and be distributed based on a person’s will or on state law if there is no will.
Another error is not involving successor trustees soon enough. These are the people who will manage the trust if the creator becomes incapacitated or after the creator’s death, so it is important for them to understand the creator’s intentions for the trust. They should also know where the trust and other important documents are located. It may help to introduce successor trustees to people at the relevant financial institutions.
People might also consider discussing their estate plan with family members who are not trustees, executors or otherwise involved in the management of the plan. This might help family understand why certain choices are made and reduce the likelihood of challenges. People should also think carefully about who they choose as trustees.
