If you've set up a Revocable Living Trust, congratulations! As a Santa Barbara will and trust lawyer, I assure you that you've taken a very important step in protecting your assets and your family in the event you become incapacitated or pass away.
However, just because you've completed this important step does not mean that you are done with “trust planning” forever. There may be times in your life where your trust will need to be amended or updated to ensure that your wishes are followed and that your trust document works as planned. Estate planning is never a “one and done” experience, and you'll want to take caution to avoid these common mistakes that often cause trusts to fail when they are ultimately needed.
Mistake 1: Not Updating Your Trust
Your trust and the rest of your estate plan are only as good as the goals and circumstances they were based on. There's a reason trusts are sometimes referred to as “Living Trusts.” They are living documents that should change with your life. Consider that your family situation, your wishes, and the assets you own will look much different at 70 than they did at 30. Not to mention, the law is constantly changing, and your documents need to be amended to ensure that they reflect such changes. All of these circumstances will have an impact on your plan, and if your plan doesn't keep up with your needs, your family could face unnecessary expenses, hassles, and frustration.
Mistake 2: Not Owning Assets Correctly In The Name Of Your Trust
If your assets are not owned properly in the name of your trust, your entire estate plan may be worthless. At best it will not work the way you intended and will create unnecessary work, time delays, costs, and added grief for your loved ones. It may even force your loved ones into probate court to deal with assets that were not titled properly, which is a scenario you likely wanted to avoid by creating a trust in the first place! The best way to ensure this doesn't happen to your family is to take a fresh look at your trust every time you buy or sell an asset to ensure that it's titled properly and will be protected by the trust.
Mistake 3: Thinking Your Trust Will Protect Assets If You Need Long-Term Care
Many people who create a revocable living trust assume that their assets will be protected in the event that they go into a nursing home or need long-term care benefits in the future, such as Medicaid or Veteran's Aid and Attendance. However, assets held in a revocable living trust are the same as any other assets that are in your name. Worse yet, in some states, if your house is in your trust, it no longer qualifies as an exempt asset and will count against you for qualification purposes. That's why it's critical to work with an estate planning attorney who will not only evaluate your goals now, but also help you create a plan with the future in mind so that you can utilize alternative options (such as creating an Irrevocable Trust) or create “triggers” within your planning so that you can change gears as you age and need more care. If you created a revocable living trust in the past and you're worried that you've made one of these mistakes that may cause your plan to not work as you'd like, our will and trust attorneys are here to help you. Simply call our law firm at 805-946-1550 to schedule a consultation.