All Trusts Are Not The Same

     A trust is a legal contract that should be created by or supervised by an attorney who is well-versed in trust law and who is well aware of your unique situation to create a trust that meets your unique needs. It seems as though, the general public believes that all living trusts are the same, while that is simply not true. You are a unique individual with unique planning needs and so your living trust should be uniquely drafted to meet your unique situation.

     The fact is that there are literally hundreds of or even thousands of possible options that could be part of a trust. Really the possibilities are only limited by law and by the imagination of the trust preparer and you as the trust maker and therein lies the problem as well. There have been many “bad trusts” through the years that have been sold to the unsuspecting public by people wanting to make money on the popularity of the “revocable living trust.” The term “bad trust” is very broad in its application but very specific in its meaning.  A “bad trust” is any trust that does not meet or exceed the expectations and needs (expressed or implied) of the trust maker when that trust is actually used.

     In applying the term “bad trust,” there are many situations where this can occur. This article will mention several broad categories, including:  inexperienced attorneys and non-attorney drafters, Do-It-Yourself Living Trusts, boiler plate trusts, failure to provide for all contingencies, failure to fund trusts, failure to update trusts for future changes.

Inexperienced Attorneys and Non-Attorney Drafters:  Please remember that a trust is a legal contract that can be enforced in a court of law. Consequently, it would make sense that an attorney should be preparing the trust agreement. Yet there are many companies and other professionals out there that are willing to sell you a living trust. BE VERY CAUTIOUS OF BUYING A LIVING TRUST FROM A NON-ATTORNEY. Attorneys are trained to interpret documents and use words carefully creating documents.  Often with non-attorneys you are being sold documents that are boiler plate or do-it-yourself documents which we will discuss later.  But having said that an attorney should prepare your trust, even within the legal profession, you should be looking for an attorney who has experience in preparing trusts. Trust-based estate planning is a specialized area of the law and you do not want your divorce, litigation, or patent attorney to prepare your trust and other estate planning documents.

Do-It-Yourself Living Trusts:  The media ads and especially the internet are saturated with do-it-yourself living trust ads ranging from $19.95 on up. You have spent a lifetime earning and growing your assets do you really want to risk the transfer of those assets on a discount, over-the-internet, and fill-in-the-blank product?

Boiler Plate Living Trusts:  Trusts are not a one-size fits all proposition. There are a lot of trust provisions that should be in every trust, but in a boiler-plate trust usually the only things that are changed is the names of the trust makers, trustees and beneficiaries. Many inexperienced attorneys will take the “firm” trust form and just replace the names. This also happens with any attorney or non-attorney who prepares a living trust without sitting down and finding out about your unique situation. How can you possibly have a trust that meets all of your goals and expectations if the drafter has not taken the time to ask you what those goals and expectations are?

Failure To Provide For All Contingencies:  An experienced trust attorney will take the time to talk with you to discover what current facts or future events you are concerned about and draft language to address those specific concerns. The experienced trust attorney will also push you to consider some future possibilities that you would never have thought about, let alone plan for them. A well-drafted trust will also have a lot of language that may never apply, but which would you rather have, a trust that covers as many future contingencies as possible or one that only addresses now known facts?

Failure To Fund Trusts:  THE FAILURE OF THE TRUST PREPARER TO ASSIST WITH CHANGING OF TITLE FROM INDIVIDUAL OR JOINT NAMES TO THE TRUST OR TRUSTEES AND YOUR FAILURE AS TRUST MAKER TO GET ALL EXISTING OR NEW ASSETS IN THE TRUST IS THE BIGGEST REASON WHY TRUSTS FAIL.  Your estate will not avoid probate, your estate will not get promised estate tax benefits, and your successors will get no possible creditor protection unless titles to all of your assets are changed to the trust or the trustees.

Failure To Update Trusts For Future Changes:  As much as you want your wealth transfer planning to only be addressed once and never have to look at it again, we all know that the only guarantee life gives us is change. Things change all the time. You are responsible for letting your experienced trust attorney know when your life changes enough to warrant trust changes and your experienced trust attorney should be expected to let you know when the law changes enough to prompt changes to your documents.  This should include changes in federal law as well as the law of all fifty states.

     So if you have no trust or an existing trust that appears to be a “bad trust,” find an experienced trust attorney and call them today to make sure you get a comprehensive well-drafted and updated trust.

Omaha Estate Planning Attorneys Rodney Halstead and Stephen Schmidt serve clients in Omaha, Nebraska as well as the surrounding cities of Fremont, Millard, Gretna, Elkhorn, Bellevue, Papillion, LaVista (La Vista), and Ralston. Please feel free to contact the office if you or a family member is in need legal assistance with Nebraska Probate and Estates, Nebraska Estate Planning and Asset Protection, Nebraska Elder Law, Nebraska Trust Planning, Nebraska Tax Planning, Nebraska Medicaid Planning, Nebraska Wealth Transfer Planning, Nebraska Business Succession and Planning or Nebraska Fiduciary Services.

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