Setting Up a Trust Fund: Avoid these Mistakes

Have you come to the conclusion that you want to setup a trust fund? If so, you have your reasons for making this decision.

While there are many benefits of a trust fund, we want you to keep one thing in mind: it’s possible that you could make a serious mistake that impacts the person who will gain access to the trust in the future.

In an overall sense, it’s easier to talk about the benefits of setting up a trust fund as opposed to the things that could go wrong. However, you need to look at both sides. When you understand the mistakes that people have made in the past, you can ensure that you don’t go down this path in the future.

Once you decide that you want to set up a trust fund for your child or children, it’s time to learn more about the process of doing so. Along the way, you’ll be faced with many decisions. Along with this, there will be mistakes that you have to avoid at all costs.

Speaking of mistakes, here are the three most common:

1. Naming a trustee of the trust. You know that you want to set up a trust fund for your children. And while this is a good thing, you need to think long and hard about who will be the trustee.

If you don’t have the right person in charge, this could negatively impact the trust in a number of ways. Is this a risk you are willing to take? Of course not.

2. Layout the goals of the trust. It’s one thing to say that you’re going to create a trust fund. It’s another thing entirely to know your goals, set these clearly, and make sure everyone is on the same page.

This means something different to every parent, but as you get started you should think about two things:

• When your child or children will have access to the funds.
• The manner in which the money will be distributed.

Should your children gain access to all the money when they reach a particular age? Do you want to distribute the funds to him or her in intervals, such as every three or five years? These are the types of important questions you need to address.

As you set goals for the trust fund, it becomes much easier to answer key questions in a confident manner.

3. A do it yourself trust fund. Many people are under the impression that setting up a trust fund is a simple process. While you may have a basic idea of what you’re trying to accomplish, you need to be sure of one thing: the legality of the trust fund.

If you want to avoid potentially harmful mistakes in regards to your trust fund, make sure you work closely with an attorney.

Yes, this is going to cost you some money. And yes, it probably means that it will take longer to create your trust fund. But in the end, the benefits of working with an attorney far outweigh any potential downfall.

Just Get Started

Once you are 100 percent confident that setting up a trust fund is a good idea, you need to get started. Stop thinking about this. Stop putting it off. Just like anything else associated with estate planning, you don’t want to wait too long to take action, as you never know what the future will bring.

Now that you know which mistakes to avoid, which steps to take, and why you should consult with an attorney, there’s no good reason to wait around any longer.

Conclusion

Above, we talked about the dangers associated with a do it yourself trust fund. If you want to learn more about these dangers, don’t hesitate to download our free report entitled “Dangers of Do-It-Yourself Wills and Living Trusts.”

Once you read this, you’ll better understand why you aren’t in position to handle this process on your own. Instead, you need to consult with an attorney who knows the ins and outs of the law and how to provide you with the right guidance.

Setting up a trust fund is a good idea for many reasons. If you follow this advice, you’ll find yourself in position to move forward in an efficient and effective manner.

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Stephanie Thompson, Estate Planning Attorney of Krueger Hernandez & Thompson SC

As the owner of Krueger Hernandez & Thompson SC, it is Stephanie’s mission to address each client’s goals for their estate plan. By identifying their wishes and concerns she can educate, guide, and counsel on the different tools and options that will effectively and efficiently accomplish those goals.

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