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What are some trust mistakes you can make?

Setting up a trust for your child or children is a great way to fund things such as a college education or ensure your minor children are cared for if something happens to you. Making a simple or major mistake when creating a trust for a child can mean serious issues down the road, and you can't always go back to correct those mistakes.

One of the biggest mistakes you can make is putting the wrong trustee in charge. The trustee is the person who is in charge of managing the trust. While they are supposed to manage the assets in the trust in keeping with your wishes and how the trust is laid out, trustees don't always do this and some use the trust to their personal advantage. It's important to choose a trustee you trust implicitly.

Just because you trust someone doesn't mean they are the right person for the job, though. You might trust your sister, but that doesn't mean she has the skills and will power to handle the job. Talk to your estate lawyer for help in deciding what traits someone should have to be a good trustee.

Another mistake commonly made when setting up a trust is setting goals that aren't in the heir's best interest. For example, you can set up a trust to fully fund the heir at age 18 or 21, but most people are not ready to manage a large amount of wealth at these ages. You might instead choose to set it up to fund certain expenses over the years, such as a first car, college tuition, a wedding or a home. Whatever your goals are for a trust, working with a professional trust administration lawyer can help you achieve them.

Source: Investopedia, "5 Common Mistakes When Creating a Trust Fund for Your Child," Sean Bryant, accessed Dec. 09, 2016

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