Setting up a living trust can ensure that you address all aspects of the administration of your estate and even health issues in the event of an emergency.
You can provide clauses for advanced directives within your living trust, and this gives a designated individual the ability to sustain or withdraw medical care.
It is important to take great care and caution in setting up a living trust. You must be sure to include certain language in the living trust document, such as terms that protect you in the event of mental illness.
Naming a Successor Trustee
One term that you will likely want to include in a trust document is the name of a successor trustee. You should include the name of a designated individual who can manage trust property upon your sudden mental illness or death.
The trustee should be someone who understands your intentions for trust property and how to maximize the value of assets in trusts. He or she will be charged with the task of protecting trust assets from creditors and maximizing any interest gained from investments in the trust.
Naming the Designated Beneficiaries
You should also be very clear about naming designated beneficiaries for your trust. If you do not include the full name of a beneficiary, then there may be a contest to the disbursement of your assets upon your death.
A trust lawyer can help you draft a trust document and include terms that are as clear as possible. He or she will include complete information about your beneficiaries within the trust so that there is no issue as to who should receive assets upon your death.
Including a Residual Clause in the Trust
A residual clause must also be included in a trust that is created for your assets. A residual clause will direct the trustee on how to manage assets that are left over after all debts, taxes and distributions have been paid. You may wish to give the rest of your funds to a charity that interests you or to start a scholarship fund with any remaining assets. It is vital to include a residual clause in the trust, because you may receive an inheritance from another individual that adds extra funds to your entire estate. There could be issues with your living trust if you fail to include a residual clause.
Your estate may have to go through probate to distribute any extra assets that you receive from another inheritance. This could cause administrative fees to be taken from your estate, so it is important to always include a residual clause. Your estate could even be forced to pay more administrative fees than the worth of the assets that are received from another inheritance. A trust lawyer from the Nagel Law Firm can help you understand the function of a residual clause and how to create a clause that reflects your genuine intent.
Changing Your Trust
If you think that you will ever change your trust in the future, then it is smart to work with a trust lawyer. You can simply call your trust lawyer to arrange a meeting to add an amendment to your trust or to completely transfer your assets to a new trust instrument. A lawyer will ensure that any changes made to your trust are done in a legal and professional manner.
IRS Circular 230 Notice: The Statements contained herein are not intended to and do not constitute an opinion as to any tax or other matter. They are not intended or written to be used, and may not be relied upon, by you or any other person for the purpose of avoiding penalties that may be imposed under any U.S. Federal tax laws or otherwise.