On February 7, 2013

All too many people in Colorado and elsewhere think that they can complete their estate planning on their own. They see the text of a trust agreement on a website, and think that it is OK to copy it and insert their own name and beneficiaries. Taking the initiative to determine what should happen to your property and assets after you die is wise, but the do-it-yourself approach comes with risks. Such online documents may not comply with applicable state and federal law where the person lives. The tax code may well have been modified since the online document was drafted, making its use extremely dangerous; these kinds of self-created trusts also have the potential to be extremely costly.

As well, when people have existing trust agreements, they often simply draft an amendment to it on their own, changing the beneficiaries or trustees. The truth of the matter is that any trust agreement should be periodically reviewed by an estate planning attorney to ensure that it is still enforceable and that it still works to the greatest benefit of all concerned.

Trusts that are amended too many times have the potential to become an undecipherable mess, and at some point, they probably should be redrafted from scratch or restated, rather than being amended once again. Such a restatement can take over as the controlling document of an existing trust, leaving whatever money or other assets were used to fund the trust right where they were.

Getting an attorney to review your existing trust agreement and make the appropriate changes will cost something, but it is money well spent when the alternative may be winding up with a trust that either doesn’t work at all, or that has unpleasant, unforeseen and costly tax and financial consequences for you or your family.

Source: nwi.com, “ESTATE PLANNING: Trusts are not a do-it-yourself job,” Christopher W. Yugo, Jan. 13, 2013

Categories: Trust Administration

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