Whether it is small scale or large scale, many individuals in Ohio and elsewhere plan and prepare for the future each year. Maybe, you seek to protect your assets. Possibly, you just inherited valuable property. Perhaps, you were recently diagnosed with a serious disease. Or you just simply want a plan in place to designate who will get your property and assets after your passing.
Benefits of a trust
With the drafting of an estate plan, individuals are not only concerned about designating beneficiaries and heirs that will inherit their property and assets, but they are also likely concerned about probate and the impact it could have on their loved ones. Additionally, they want to ensure everything is distributed in accordance with their wishes.
Creating a trust is a valuable step to take. It helps to better structure your estate plan, ensuring your assets are distributed in accordance with your wishes and terms. While a trust can help preserve your legacy, protect assets and help avoid probate, there are situations where a trust could cause more harm than good.
Potential pitfalls
There are some situations in which trusts can lead to problems.
One occurs when the document creates a brother’s or sister’s keeper. This occurs when one child is appointed as the successor trustee — that is, they take over the role of the first trustee — to distribute funds to another child. This could create a situation that is unfair to both children, often resulting in them taking the matter to probate court.
Another is when a trust results in siblings working with or for each other. Often, parents believe that leaving a foundation or business for their children to run would allow for them to remain close and while also providing financial security.
This situation often results in disagreements among the children that do not relate to the best interests of the business or foundation. This could inadvertently cause detriment to the business and cause resentment.
Whether you seek to initiate the drafting process of your estate plan or update it, it is important to understand the role of trusts and other estate planning tools and documents.