California residents may be unaware about the most common mistakes people make when planning an estate trust. While it may be difficult to think about, not taking precautions when arranging a trust can cause major dilemmas in the future. For example, many individuals make the mistake of believing that a trust exists after signing a document; however, a trust does not stand until it carries assets. Creating a trust is only the first step in the process.
Often, people assume that the state will handle their financial affairs upon death. Even if one has a written will, it only indicates which family members will receive what is specified. An estate may have to be handled by a public probate process, which can be costly. Establishing a revocable trust may help to eliminate the probate case, ensuring that an individual's privacy is upheld.
The associated beneficiary forms associated with insurance policies or one's retirement account has nothing to do with an established trust or will. The individuals specified on those forms will receive compensation upon death. Reviewing the names on the forms is a good idea in case revisions need to be made, especially if one has recently married, divorce or had children.
The probate process can be extremely costly. It may be a good idea to hire a probate and estate attorney to assist with establishing the proper trust process. An attorney may be able to assist in explaining the associated terminologies during the process of setting up a trust and may be able to offer advice about what kind of trust is best for an individual's financial needs.
Source: CNBC, "Trust bust: Steer clear of the 8 biggest estate-planning mistakes", Barry Glassman, January 04, 2015