Seven questions to ask yourself if you have a revocable trustby Kelly Karczmar on 01/08/15
- Have you funded your trust? It is not uncommon for my new clients to show up with a well-crafted trust that was never funded with assets. If you don’t transfer property (e.g. real estate or financial accounts) into your trust, then your property will probably pass through probate at great cost to your beneficiaries.
- Does your trust protect your beneficiaries from lawsuits and divorce? If a creditor sues your child, you probably don’t want your child’s inheritance to go to the creditor. If your child divorces, you probably don’t want your child’s inheritance to be shared with your child’s ex-spouse. A trust can shield you from those risks.
- At what age will your beneficiaries receive their inheritance? You can stagger the distribution of your trust proceeds so that your beneficiaries receive their inheritance incrementally. You can appoint trustees to manage distributions so that financially inexperienced beneficiaries are protected.
- Who is the beneficiary of your retirement plans and other investments? If you choose to list your trust as beneficiary, then distributions should be timed to reduce negative tax consequences.
- Are you comfortable with the successor trustees you appointed? You should review your trust from time to time to ensure that you still want the successor trustee(s) you originally named. Relationships change over the years.
- Does your trust make sense given the current estate tax scheme? Estate tax law changes dramatically from year to year. This is true at both the federal and state levels. You should ensure that your trust makes sense in the current legislative environment.
- Do you have a pet trust? Illinois law allows you to use a trust to make formal provisions for your pets.