Common Trust Mistakes to Avoid

August 19, 2025

A trust helps manage your assets during your lifetime and after death. It allows you to avoid probate, plan for incapacity and maintain privacy. However, creating a trust is only the beginning. Many people fail to maintain or properly structure their trusts, which can jeopardize their intended benefits. There are some common trust mistakes to avoid.

Failing to Fund the Trust

The most common and critical mistake is failing to transfer assets into the trust. A trust without assets—sometimes called an “empty trust”—offers no legal control. If your real estate, accounts, or investments aren’t retitled in the trust’s name, they remain subject to probate.

This oversight defeats one of the primary purposes of a trust. Ensuring that assets are properly titled or assigned to the trust is essential. Work with an attorney to confirm that your trust is fully funded, especially if your assets change over time.

Choosing the Wrong Trustee

The trustee plays a vital role in managing and distributing the trust’s assets. Selecting someone based on family ties rather than capability can lead to conflicts or mismanagement. A trustee should be financially literate, organized and impartial.

Some people name co-trustees, thinking it will balance power. However, this can complicate decision-making. If there’s any concern about fairness, consider naming a professional fiduciary or trust company that is more familiar with managing assets instead.

Not Updating the Trust

Major life events—such as marriage, divorce, births and deaths—require updates to your trust. Yet many people forget to review their documents for years. This can result in outdated beneficiaries, removed heirs, or outdated guardianship preferences.

Changes in tax or state law may impact how your trust operates. Regular legal reviews help ensure that your trust accurately reflects your current wishes and complies with current laws and regulations.

Overlooking Tax Implications

Trusts can offer tax benefits. However, they can also trigger tax obligations if not properly structured and administered. For example, irrevocable trusts may have different tax rules than revocable ones. Failing to coordinate your trust with your overall tax and estate plan may reduce your assets and increase liability for your heirs.

These common trust mistakes to avoid happen every day, because people do not take the time to create them properly. By working with a financial advisor and estate planning attorney, you can optimize your trust in a tax-efficient manner. If you would like to learn more about trusts, please visit our previous posts.

Reference: Investopedia (March 04, 2025) “Lessons From the Ultra-Wealthy: Avoid These Common Trust Mistakes”

Image by aymane jdidi

Is Your Trust Vulnerable To Lawsuits?

July 22, 2025

Many individuals turn to trusts to safeguard their assets, streamline the inheritance process and maintain privacy. Is your trust vulnerable to lawsuits? While a well-structured trust can offer significant protection, it is not automatically immune to lawsuits. The type of trust, its funding, and management all play a role in determining its legal vulnerability.

Revocable vs. Irrevocable Trusts

The first thing to understand is the difference between revocable and irrevocable trusts. A revocable trust—also called a living trust—can be changed or dissolved by the grantor at any time. Because the grantor retains control, the trust assets are still considered part of their estate. This means they can be subject to lawsuits, creditor claims and estate taxes.

In contrast, an irrevocable trust removes the assets from the grantor’s control. Once transferred, the assets belong to the trust itself. This separation offers greater protection from creditors and legal judgments but comes at the cost of flexibility. You cannot modify or revoke the trust without legal hurdles or court intervention.

If asset protection is a primary goal, an irrevocable trust is typically the better choice.

When can Trust Be Challenged?

Even a carefully drafted trust can face legal challenges under certain circumstances. Common reasons include:

Claims of undue influence or diminished capacity: Heirs may argue the grantor was coerced or not mentally competent when creating or amending the trust.
Allegations of mismanagement: If a trustee fails in their fiduciary duty, beneficiaries can bring legal action against them.
Disputes over asset distribution: Unclear or inconsistent terms can lead to family conflict and potential litigation.

To minimize these risks, it is essential to have clear language, thorough documentation, and a competent trustee. Some individuals choose corporate trustees to reduce the risk of personal bias or mismanagement.

Are Trust Assets Safe from Personal Lawsuits?

For revocable trusts, the answer is generally no. Because the grantor retains control of the assets, they remain vulnerable to personal lawsuits, such as claims arising from car accidents or business disputes. In the case of irrevocable trusts, the assets are better protected, provided the trust was not established with the intent to defraud creditors or avoid existing obligations.

Timing also matters. Courts may scrutinize asset transfers into a trust if they occur shortly before a legal claim arises. This is especially true in bankruptcy or divorce proceedings.

Additional Strategies for Protection

For high-risk individuals, such as business owners, physicians, or landlords, advanced asset protection planning is often necessary. This might include:

Domestic or offshore asset protection trusts
Limited liability companies (LLCs) are used in conjunction with trusts
Insurance policies to cover legal risks

A trust is just one piece of the puzzle. Comprehensive protection often involves combining legal, financial and insurance strategies tailored to your unique situation. Contact an estate planning attorney today to see if your trust is vulnerable to lawsuits, ensuring that your wishes are fulfilled without the burden of a legal battles. If you would like to learn more about different types of trusts, please visit our previous posts.

Reference: SmartAsset (Feb. 21, 2025) “Estate Planning: Can You Sue a Trust?”

Image by Sergei Tokmakov

Pros and Cons of Testamentary Trusts

June 18, 2025

A testamentary trust is a type of trust established through a last will and testament. Unlike a living trust, it doesn’t take effect until after the person’s death and only comes into existence during the probate process. There are pros and cons of testamentary trusts. These trusts can be a powerful estate planning tool for individuals who want to provide oversight and structure in how assets are distributed to heirs. Parents of minor children often use them, individuals concerned about a beneficiary’s financial habits, or those who want to protect assets from creditors or divorcing spouses.

However, testamentary trusts have limitations, primarily because they are subject to probate and are part of the public record. Understanding the advantages and disadvantages of this planning strategy can help you determine whether it aligns with your goals.

How a Testamentary Trust Works

A testamentary trust is created by including specific instructions in your will. These instructions name a trustee, outline how and when the trust assets should be used, and define who will benefit from the trust.

Since the trust is part of the will, it is subject to probate—a court-supervised process that validates the will and oversees the distribution of the estate. Only after the court finalizes probate does the testamentary trust become active.

The trustee then manages the assets according to the instructions, including paying for education, distributing funds over time, or restricting access until the beneficiary reaches a certain age.

Benefits of Testamentary Trusts

One of the primary benefits of a testamentary trust is the control that it affords. The person creating the trust (the testator) can set rules that continue long after death. This is particularly useful for:

Minor children who cannot legally manage money
Adult children with poor financial habits or substance abuse issues
Beneficiaries with disabilities who need long-term support
Families who want to protect their inheritance from lawsuits or divorce settlements

Because the trust is created after death, assets are not transferred or placed into it during the person’s lifetime, making it a simpler option for those who don’t want to manage a living trust.

Testamentary trusts also allow for the naming of a professional or trusted individual as a trustee, providing an additional layer of financial oversight and guidance for the beneficiary.

Drawbacks to Testamentary Trusts

Despite the control they offer, testamentary trusts have disadvantages. Since they are created through the will, they require probate, which can be a time-consuming, costly and public process.

The trust also cannot begin operating until the probate is concluded, which may delay access to funds during a critical period. If the trust is intended to support children or dependents immediately after death, this delay could create financial hardship.

Unlike revocable living trusts, which are created and managed during a person’s lifetime, testamentary trusts offer no opportunity to test or adjust the terms in advance. Once the testator passes away, the terms are fixed.

Finally, because testamentary trusts are part of the probate record, they may be more vulnerable to disputes or challenges from dissatisfied heirs.

Is a Testamentary Trust Right for You?

For some families, a testamentary trust offers the right balance of oversight and simplicity. It’s often chosen by individuals who have straightforward estates but want to add some protection for vulnerable heirs.

Others may benefit more from a revocable living trust, which avoids probate and offers greater privacy and flexibility.

Working with an estate planning attorney can help you understand the pros and cons of testamentary trusts, draft appropriate terms and create a plan that aligns with your goals and your family’s needs. If you would like to learn more about testamentary trusts, please visit our previous posts.

Reference: MetLife (March 13, 2025) “Testamentary Trust: Definition and How It Works”

Image by rmt-1169676

The Estate of The Union Season 4|Episode 8

The Estate of The Union Season 4|Episode 4 is out now!

June 16, 2025

The Estate of The Union Season 4|Episode 4 is out now! While it can sound shocking, the Mortality Rate in Texas is 100%!!!

Brad is an old Boy Scout and the Scout’s motto is “Be Prepared.” This edition of The Estate of the Union is all about preparation and what terrible things can happen to the family of someone who was NOT prepared.

Ann Lumley is an extraordinarily respected attorney, and she is the Director of After Life Care here at Texas Trust Law. Ann and Brad discuss the challenges faced by loved ones whenever anyone passes away, and particularly when the deceased had no planning or inadequate planning. Ann has the ability communicate complex concepts clearly – and with a sense of humor too!

In each episode of The Estate of The Union podcast, host and lawyer Brad Wiewel will give valuable insights into the confusing world of estate planning, making an often daunting subject easier to understand. It is Estate Planning Made Simple! The Estate of The Union Season 4|Episode 4 is out now! The episode can be found on Spotify, Apple podcasts, or anywhere you get your podcasts. If you would prefer to watch the video version, please visit our YouTube page. Please click on the links to listen to or watch the new installment of The Estate of The Union podcast. We hope you enjoy it.

Texas Trust Law focuses its practice exclusively in the area of wills, probate, estate planning, asset protection, and special needs planning. Brad Wiewel is Board Certified in Estate Planning and Probate Law by the Texas Board of Legal Specialization. We provide estate planning services, asset protection planning, business planning, and retirement exit strategies.

Removing a Trustee Due to Incapacity

April 21, 2025

A trustee is responsible for managing and distributing assets according to the terms of a trust. However, when a trustee becomes mentally or physically incapacitated, they may no longer be able to fulfill their legal and fiduciary responsibilities. In such cases, the beneficiaries or co-trustees may need to take steps to remove the incapacitated trustee and appoint a capable replacement. Removing a trustee due to incapacity is a sensitive legal matter. It requires careful planning and adherence to the terms of the trust.

Understanding the process and potential challenges can help protect the trust and ensure that assets continue to be appropriately managed.

Identifying Signs of Trustee Incapacity

A trustee’s incapacity is typically related to cognitive decline, physical illness, or other conditions that prevent them from effectively managing the trust. Common signs that a trustee may no longer be fit to serve include:

Forgetting important financial obligations or failing to distribute assets as required
Making poor financial decisions that jeopardize the value of the trust
Neglecting record-keeping responsibilities, leading to missing or inaccurate financial reports
Becoming unresponsive to beneficiaries or failing to communicate about trust matters
Receiving medical diagnoses, such as dementia or severe physical impairments, that prevent them from fulfilling their duties

Incapacity can be gradual or sudden, so it is crucial to monitor the trustee’s ability to manage the trust effectively and act when necessary.

Reviewing the Trust Document for Removal Provisions

Most well-drafted trusts include guidelines for removing a trustee in the event of incapacity. These provisions often specify:

Who has the authority to remove a trustee (e.g., beneficiaries, co-trustees, or a trust protector)
What evidence is required to prove incapacity, such as a physician’s certification or court determination
The process for appointing a successor trustee to take over management responsibilities

If the trust document clearly outlines removal procedures, the process can be relatively straightforward. However, if the document does not specify incapacity procedures, court intervention may be required.

Seeking Medical and Legal Evidence of Incapacity

In cases where a trustee’s incapacity is disputed, gathering medical and legal evidence is necessary. This often includes:

Medical documentation from a licensed physician stating that the trustee is no longer capable of making financial decisions
Statements from beneficiaries or co-trustees detailing instances of mismanagement or neglect
Court petitions, if necessary, to legally establish the trustee’s incapacity and authorize their removal

Having clear documentation can prevent unnecessary legal disputes and ensure a smooth transition of trustee responsibilities.

Initiating the Removal Process

If the trust document provides a process for removal, the first step is to follow the outlined procedures. This may involve notifying the incapacitated trustee, obtaining required medical opinions and formally naming a successor trustee.

If no removal process is specified in the trust, the beneficiaries or co-trustees may need to file a petition in probate court to request judicial intervention. The court will review medical evidence, evaluate the trustee’s condition, and determine whether removal is in the best interest of the trust and its beneficiaries.

Appointing a Successor Trustee

After the incapacitated trustee is removed, a new trustee must be appointed to manage the trust. The trust document typically designates a successor trustee. However, if no successor is named, the beneficiaries or the court may need to appoint one.

Choosing a responsible and qualified individual or corporate trustee ensures that the trust remains properly managed and continues to serve its intended purpose.

Preventing Future Issues with Trustee Incapacity

Removing a trustee due to incapacity is never easy. To avoid future complications, it is essential to include clear incapacity provisions in a trust. These provisions should outline who has the authority to remove a trustee, what documentation is required and the process for appointing a successor.

Families can also consider appointing co-trustees or a trust protector who can step in if the primary trustee becomes incapacitated. Taking these steps ensures that the trust remains in capable hands and that assets are protected for beneficiaries. If you would like to learn more about the role of the trustee in estate planning, please visit our previous posts.

Reference: ACTEC Foundation (January 2024) “Practical Considerations in Dealing with Incapacity”

Photo by Andrea Piacquadio

Estate Planning Can Bridge the Gap Between Generational Wealth

March 19, 2025

Building wealth is only half the battle—ensuring that it lasts for future generations requires careful estate planning and strategic wealth management. Many families fail to implement a structured plan, leading to lost assets, unnecessary taxes and family disputes. Without the proper legal and financial strategies, even substantial inheritances can be squandered within a generation. Estate planning can bridge the gap between generational wealth; ensuring that wealth is protected, distributed according to the family’s wishes, and sustained for years to come.

Why Generational Wealth Often Fails to Last

Studies show that 70% of wealthy families lose their wealth by the second generation and 90% by the third. The primary causes include:

Lack of financial literacy – Heirs often receive wealth without a plan for responsible management.
Estate tax burdens – Without proper planning, substantial portions of an estate may be lost to federal and state taxes.
Legal disputes – Poorly structured wills and trusts often lead to costly inheritance battles.
Failure to adapt to changing financial laws – Inheritance laws, tax regulations and trust structures evolve over time.

Estate planning provides legal structures and safeguards to prevent these issues and ensure that family wealth remains intact.

How Estate Planning Protects Generational Wealth

Structuring Trusts for Long-Term Asset Protection:

Trusts are among the most effective tools for protecting wealth and ensuring that assets are passed down responsibly. Unlike a will, which simply distributes assets, trusts provide ongoing management and protection.

Common trust structures include:

Revocable Living Trusts – Allow individuals to control assets during their lifetime, while avoiding probate upon death.
Irrevocable Trusts – Provide stronger asset protection and tax advantages by permanently removing assets from the grantor’s estate.
Generation-Skipping Trusts (GSTs) – Allow assets to bypass one generation, reducing estate tax liability for grandchildren.

Trusts also allow customized inheritance distribution, such as delayed payouts, financial milestones, or incentives for responsible wealth management.

Minimizing Estate Taxes and Legal Fees:

High-net-worth individuals face significant estate tax challenges if wealth is not structured correctly. An estate planning attorney helps reduce tax exposure through:

Gifting strategies – Annual tax-free gifts to heirs reduce taxable estate size.
Charitable giving – Donating assets through charitable remainder trusts or donor-advised funds offers tax deductions while benefiting causes.
Family Limited Partnerships (FLPs) – These allow wealth to be transferred gradually, minimizing tax burdens.

Without tax planning, heirs may be forced to sell assets or businesses to cover tax liabilities.

Preventing Family Disputes Over Inheritance:

Even well-meaning families can experience conflict over wealth distribution. An estate planning attorney helps prevent disputes by:

Creating straightforward wills and trust agreements that specify asset distribution.
Including business succession plans to ensure seamless leadership transitions in family businesses.
Establishing conflict resolution mechanisms like mediation clauses to settle disputes outside of court.

A structured estate plan ensures that inheritance disagreements do not escalate into costly legal battles.

Teaching Financial Responsibility to Heirs:

Wealth transfer is more effective when heirs understand how to manage their inheritance. Estate planning attorneys work with families to:

Educate younger generations on financial management and investment strategies.
Introduce heirs to financial advisors who can help them navigate wealth preservation.
Incorporate inheritance incentives that promote responsible spending and investment.

Without financial education, even a well-structured estate plan can fail to maintain generational wealth.

Estate Planning for Business Owners

Family businesses require careful succession planning to ensure stability after the founder’s passing. An estate planning attorney helps:

Identify and prepare successors for leadership transitions.
Establish buy-sell agreements to ensure smooth ownership transfers.
Structure ownership in trusts or LLCs to provide financial protection.

Companies often struggle to survive past the first generation without a business succession plan.

Secure Your Family’s Financial Legacy

Estate planning can bridge the gap between generational wealth. It will give you the confidence that your assets are preserved, managed wisely and passed down without unnecessary financial losses. if you would like to learn more about managing generational wealth, please visit our previous posts.

References: J.P. Morgan (Nov. 18, 2024) “We Need to Talk: Communicating Your Estate Plan With Your Family” and Business Insider (Feb. 9, 2025) “Inside the Retreat for Billionaire Heirs Trying to Give Away Their Money”

Image by grplamondon

A Trust Only Works if it is Properly Funded

January 9, 2025

A revocable trust is a powerful estate planning tool that helps individuals manage their assets during their lifetime and distribute them efficiently after their death. However, a trust only works if it is properly funded. The American College of Trust and Estate Counsel explains that many individuals make the mistake of setting up a trust but fail to transfer assets into it. This leaves their estates vulnerable to probate, taxes and disputes. To fully benefit from your trust, you must ensure that it is appropriately funded with all intended assets.

What It Mean to Fund a Trust

Funding a trust involves transferring ownership of assets from your name into the trust’s name. This step gives the trust legal control over the assets, allowing them to be managed and distributed according to the terms of the trust. Without this transfer, your assets may remain subject to probate, and your trust could become an ineffective document.

Key asset types that can and should be transferred into a trust include:

Real estate properties
Bank and investment accounts
Tangible personal property, such as valuable jewelry, artwork, or collectibles
Business interests and intellectual property
Life insurance policies (with the trust named as the beneficiary)

By funding your trust, you ensure that these assets are managed seamlessly during your lifetime and distributed efficiently upon your death.

Why Trust Funding is Essential

Failing to fund a trust undermines its primary purpose. If assets remain outside of the trust, they may become subject to probate—the often lengthy and costly legal process of settling an estate. This can delay the distribution of assets to your heirs and increase the likelihood of disputes among family members.

A funded trust also provides benefits that unfunded trusts cannot, including:

Privacy: Unlike wills, which become public records through probate, trusts keep the details of your estate private.
Control: Funding the trust ensures assets are distributed according to your wishes without interference from courts or state laws.
Continuity: In the event of incapacity, the trust enables a successor trustee to manage your assets without court intervention.

How to Fund a Trust

Properly funding a trust requires transferring ownership of assets into the trust and ensuring that documentation is updated to reflect the change. Each asset type requires specific steps:

Real Estate

To transfer real estate, you must execute a deed transferring ownership to the trust. This often involves recording the new deed with the local land records office. Consult an estate lawyer to ensure that the transfer complies with state laws and doesn’t inadvertently trigger taxes or other issues.

Bank and Investment Accounts

Banks and financial institutions typically require documentation to retitle accounts in the name of the trust. This might involve filling out specific forms or providing a copy of the trust agreement. Failing to update account ownership could result in these assets being excluded from the trust’s control.

Tangible Personal Property

A written assignment can transfer tangible personal property to the trust, such as art, heirlooms and jewelry. The assignment lists the items being transferred and formally declares their inclusion in the trust.

Life Insurance and Retirement Accounts

While retirement accounts, like IRAs and 401(k)s, are not typically retitled to a trust for tax reasons, you can name the trust as a beneficiary. For life insurance policies, updating the beneficiary designation to the trust ensures that proceeds are directed according to the trust’s terms.

Business Interests

If you own a business, transferring shares or interests into the trust allows the trustee to manage them as needed. This requires amending operating agreements, stock certificates, or partnership documents to reflect the transfer.

Common Pitfalls to Avoid

Even with good intentions, individuals often make mistakes when funding their trusts. Common errors include:

Leaving assets out of the trust: Forgetting to transfer all intended assets undermines the trust’s effectiveness.
Failing to update beneficiary designations: Beneficiary forms conflicting with trust terms can create legal disputes.
Not reviewing the trust regularly: As assets change over time, it’s essential to revisit and update the trust to include new acquisitions.

An estate lawyer can guide you through the process and help ensure that all assets are correctly transferred and documented. Remember, a trust only works if it is properly funded. It is a living document that requires ongoing attention. Regularly reviewing and updating the trust ensures it remains aligned with your goals and includes all current assets. Properly funding your trust provides security for your loved ones, avoids unnecessary legal complications and ensures that your legacy is preserved. If you would like to learn more about funding a trust, please visit our previous posts.

References: American College of Trust and Estate Counsel (ACTEC) (Aug. 31, 2023) “Funding Your Revocable Trust and Other Critical Steps” and American College of Trust and Estate Counsel (ACTEC) (Sep 21, 2023) “Tangible Personal Property in Estate Planning”

Image by Michal Jarmoluk

The Estate of The Union Season 3|Episode 11 is out now!

January 7, 2025

The Estate of The Union Season 3|Episode 11 is out now! We all make mistakes, and usually they aren’t fatal. Unfortunately, when someone dies, a mistake made in an estate plan can be!

In this edition of The Estate of the Union, Phillip Arendall and Brad Wiewel dissect mistakes that Phillip has seen people make in the probate process. Phillip is the Associate Director of our After Life Care Division and he brings his great insight (and sense of humor) to help analyze the foibles and pitfalls he has observed in that role. We hope you enjoy listening to these cautionary tales.

In each episode of The Estate of The Union podcast, host and lawyer Brad Wiewel will give valuable insights into the confusing world of estate planning, making an often daunting subject easier to understand. It is Estate Planning Made Simple! The Estate of The Union Season 3|Episode 11 is out now! The episode can be found on Spotify, Apple podcasts, or anywhere you get your podcasts. If you would prefer to watch the video version, please visit our YouTube page. Please click on the links to listen to or watch the new installment of The Estate of The Union podcast. We hope you enjoy it.

There are Important Steps involved in Changing a Trustee

December 30, 2024

A revocable living trust is a flexible estate planning tool that allows you to maintain control over your assets, while simplifying their distribution after your passing. However, circumstances may arise where the trustee you initially appointed is no longer the best fit to manage the trust. Whether due to personal reasons, incapacity, or a breach of fiduciary duty, replacing a trustee may be necessary to ensure that your trust operates effectively. There are important steps involved in changing a trustee. This article explains the process for changing a trustee.

What Is a Revocable Living Trust?

A revocable living trust is a legal arrangement that holds assets during your lifetime and distributes them according to your wishes after death. As the grantor (creator of the trust), you typically serve as the initial trustee, retaining complete control over the assets. This type of trust is highly adaptable, allowing changes to trustees, beneficiaries, or terms as circumstances evolve.

Understanding the Role of a Trustee

The trustee is responsible for managing the trust’s assets, ensuring that they are handled by the grantor’s wishes and for the benefit of the beneficiaries. Duties may include:

Managing investments and property held in the trust.
Filing taxes on behalf of the trust.
Communicating with beneficiaries about distributions and other trust-related matters.
Adhering to the trust’s terms with the utmost integrity and professionalism.

Selecting the right trustee is critical. They must act in a fiduciary capacity, meaning they are legally bound to prioritize the interests of the beneficiaries over their own.

Common Reasons for Changing a Trustee

Circumstances that may warrant changing the trustee include:

Incapacity or Death: If a trustee becomes incapacitated or passes away, they must be replaced immediately to ensure smooth trust management.
Personal Request: A trustee may request removal due to lack of time, energy, or desire to continue their responsibilities.
Breach of Fiduciary Duty: If a trustee mismanages funds, uses trust assets for personal gain, or neglects their duties, they can be removed for violating their fiduciary obligations.
Relationship Changes: Personal or professional conflicts may make it necessary to appoint a new trustee better aligned with the grantor’s goals and beneficiaries’ needs.

Steps to Change the Trustee of a Revocable Living Trust

1. Review the Trust Agreement

The trust document should outline removing and appointing a new trustee. This language often specifies who can make changes, such as the grantor, a co-trustee, or the beneficiaries.

2. Amend the Trust

If you are the grantor and retain the right to amend the trust, you can modify the trustee designation directly. This involves drafting a trust amendment, naming the new trustee and outlining any terms related to the transition.

3. Notify the Current Trustee

Once the decision is made, notify the current trustee in writing. This ensures transparency and provides an official record of the change.

4. Consult an Estate Planning Attorney

An estate planning attorney can ensure that the amendment is legally sound and complies with state laws. They can also help navigate situations where court intervention is required.

When Court Intervention Is Necessary

In some cases, trustee removal requires filing a petition in probate court, particularly if the trustee refuses to step down or misconduct allegations arise.

The process typically involves:

Gathering Evidence: Collecting documentation, such as financial records or communication, to substantiate claims of mismanagement or negligence.
Filing a Petition: Submitting a formal request to the court outlining the reasons for the trustee’s removal.
Attending a Hearing: Presenting evidence and arguments to the court will decide whether to remove the trustee and appoint a replacement.

Court proceedings can be time-consuming and costly. An experienced estate planning attorney can guide you through this process and advocate for your interests.

Preventing Trustee Issues

While trustee changes can be necessary, they are often avoidable with careful planning:

Choose the Right Trustee: Select someone trustworthy, organized and financially responsible. Consider naming a corporate trustee or professional fiduciary, if no suitable individual is available.
Include Clear Terms: Clearly define the trustee’s duties and the process for removal within the trust document.
Communicate Expectations: Discuss the role with your trustee beforehand to ensure that they understand and accept their responsibilities.

The Role of an Estate Planning Attorney

There are important steps involved in changing a trustee. Changing a trustee is a significant decision that can have long-term implications for your estate plan. An experienced estate planning attorney can help you navigate the legal and procedural complexities, ensuring that your trust functions smoothly and aligns with your goals. If you would like to learn more about the role of the trustee, please visit our previous posts.

Reference: Smart Asset (Aug. 3, 2023) “How to Change the Trustee on a Revocable Trust”

Image by Juan Ospina

Sometimes, a Professional Trustee is a Good Idea

July 18, 2024

A couple in their 70s are trying to complete their estate plan but can’t determine who should be their trustee or executor. It’s a second marriage for both. They each have an adult child, but neither child can serve. There are no other living relatives, and all their friends are also in their 70s. Sometimes, a professional trustee is a good idea. A professional trustee or company can provide administrative services for the trust without the potential headache with family members.

The couple gets kudos for tackling this complex issue, according to the article “We’re in our 70s and don’t trust our family to handle our estate. What can we do?” from Market Watch. Most people give up at this point and then run into problems in the future, either because of incapacity or because the death of the first spouse leaves the surviving spouse in a difficult situation.

The first place to start is conversing with your estate planning attorney. They will likely know of a professional trustee or company providing “estate administration services.” It may be possible that they offer this service in their own office, too.

If this isn’t satisfactory, speak with a major financial institution, which will likely be insured and subject to state and federal regulations. They may handle your financial and personal information, such as distributing assets, closing down accounts, handling digital assets and filing income and estate tax returns.

Consider the window of time. You’ll want to be sure the person or bank will still be operating in ten to twenty years. You’ll also want to be sure they are a fiduciary. This means they are legally bound to put your interests above their own, which a court can enforce.

The fees will depend upon the size of your assets and the entity you choose. A large bank will usually charge a certain percentage of your assets. Some use a sliding scale, like 5% on the first $100,000 and a lower percentage as the asset level rises. A $1 million estate could cost around $30,000 to administer.

If a professional trustee is the same person who is administering your trusts, there will be additional fees. The assets in the trust will need to be managed, including investing, making distributions and paying taxes. Many professional trustees handle special needs trusts, where parents have left money for disabled adult children, and administer trusts for family members.

Sometimes, a professional trustee is a good idea, even when family members are available. Naming a professional, whether an institution or an individual, can alleviate concerns about family dynamics interfering with your wishes. If you would like to learn more about being an executor, or trustee, please visit our previous posts.

Reference: Market Watch (June 15, 2024) “We’re in our 70s and don’t trust our family to handle our estate. What can we do?”

Photo by Andrea Piacquadio

Category: Trust Protector

Common Trust Mistakes to Avoid

Failing to Fund the Trust

Choosing the Wrong Trustee

Not Updating the Trust

Overlooking Tax Implications

Is Your Trust Vulnerable To Lawsuits?

Revocable vs. Irrevocable Trusts

When can Trust Be Challenged?

Are Trust Assets Safe from Personal Lawsuits?

Additional Strategies for Protection

Pros and Cons of Testamentary Trusts

How a Testamentary Trust Works

Benefits of Testamentary Trusts

Drawbacks to Testamentary Trusts

Is a Testamentary Trust Right for You?

The Estate of The Union Season 4|Episode 4 is out now!

Removing a Trustee Due to Incapacity

Estate Planning Can Bridge the Gap Between Generational Wealth

A Trust Only Works if it is Properly Funded

The Estate of The Union Season 3|Episode 11 is out now!

There are Important Steps involved in Changing a Trustee

Sometimes, a Professional Trustee is a Good Idea

Categories

View Blog Archives

Watch the

Estate Of The Union

Join Our

eNewsletter and Blog Digest List

Listen to the

Estate Of The Union

Texas Trust Law

Quick Links

Areas We Serve

Connect With Us