{"id":3066,"date":"2022-02-01T20:38:01","date_gmt":"2022-02-01T20:38:01","guid":{"rendered":"https:\/\/fusionwm.com\/?p=3066"},"modified":"2022-09-01T23:09:16","modified_gmt":"2022-09-01T23:09:16","slug":"its-time-to-review-that-trust-1","status":"publish","type":"post","link":"https:\/\/fusionwm.com\/its-time-to-review-that-trust-1\/","title":{"rendered":"It\u2019s Time to Review That Trust"},"content":{"rendered":"\n
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You may have one or more trusts currently set up to help you achieve your financial goals for yourself and your family. If you don\u2019t, you may choose to do so at some point in the future. The large number of trust options that are available\u2014from charitable trusts to marital trusts\u2014means you may very well identify at least one that you find makes sense for your financial situation. <\/p>\n\n\n\n

But here\u2019s the thing: If you haven\u2019t reviewed your trust recently and assessed whether it\u2019s still on track to deliver the results you want and expect, you could be putting some of your future financial plans at risk. <\/p>\n\n\n\n

That\u2019s potentially true even if you set up a trust just a few short years ago\u2014and it\u2019s more likely if it\u2019s been five years or more since you reviewed your trust. Changes in the tax laws, developments in the financial markets and maybe even events within your family could mean that your trust is no longer ideally positioned to reflect your needs and wants.<\/p>\n\n\n\n

That\u2019s why it makes sense to pull up those trust documents and give them a careful review. Here\u2019s some advice on how to go about doing it. <\/p>\n\n\n\n

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Evaluating the all-important basics<\/h1>\n\n\n\n

One good way to approach a review of your trust or trusts is a checklist method. There tend to be a number of trust-related errors, mistakes and issues that arise frequently. Before you dig deep for esoteric problems, make sure you\u2019ve got the basics covered. <\/p>\n\n\n\n

For example, examine your revocable (or \u201cliving\u201d) trust with an eye toward the following concerns that can have a big impact if they\u2019re not set up as you want them to be.<\/p>\n\n\n\n

  1. Your successor trustees.<\/strong> Most people name themselves as trustee of their revocable trust (and their spouse as co-trustee) along with successor trustees. Make sure the successor trustees you named are still those you want in that position of authority. A once-healthy brother who has slipped into alcoholism may need to be removed from the agreements. Also review how they\u2019ll step into their roles\u2014for example, when either you or your spouse can\u2019t serve as trustee, or not until after both of you die or become incapacitated.<\/li><\/ol>\n\n\n\n
    1. Protection from lawsuits, divorce and other problems.<\/strong> Is your trust set up to protect your children and grandchildren from creditors and divorces? If your loved ones are newly engaged since you set up the trust, for example, the answer may be \u201cno.\u201d <\/li><\/ol>\n\n\n\n
      1. The current estate tax environment, both state and federal.<\/strong> Estate tax laws at both the state and federal levels can, and do, undergo changes fairly frequently based on which way the political wind is blowing. What\u2019s more, if you have moved to a different state since you drafted your trust, you may find yourself potentially facing higher (or lower) estate taxes. <\/li><\/ol>\n\n\n\n
        1. The ages when heirs will receive trust assets.<\/strong> You may have set a specific age requirement for when kids and grandkids named in your trust will receive their inheritance. Maybe it\u2019s 21 or 25 years of age. If they\u2019re still younger than those requirements, think about whether those age-based benchmarks still make sense. Has an heir become addicted to drugs? Conversely, has an heir shown particular financial savvy and responsibility? People change, of course\u2014and how they develop may impact your decision about when they should access trust assets. You might even consider a series of ages at which they can get to the money\u2014for example, by making half of the assets available at age 25 and the other half at age 35. <\/li><\/ol>\n\n\n\n
          1. The funding status of the trust itself.<\/strong> Far too often, in our experience, trusts are set up but never actually funded\u2014that is, the assets designated for the trust are never placed in it. Any review should answer the question \u201cIs my trust actually funded?\u201d with evidence that the assets have been retitled as necessary. <\/li><\/ol>\n\n\n\n
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            The next step in trust review<\/h1>\n\n\n\n

            Tackling the basics is a great start. But one of the steps that affluent families are increasingly taking these days they say adds additional value to their financial lives is to stress test<\/em> their trusts (as well as other components of their wealth planning). <\/p>\n\n\n\n

            Stress testing is a process for examining and challenging some (or even all) of the wealth planning steps you\u2019ve taken so you can assess the likelihood that they will deliver the results you expect them to in a variety of situations and scenarios. A stress test can give important insights in two areas.<\/p>\n\n\n\n