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Three Common Living Trust Mistakes

By Potentia Wealth


A living trust is a great way to protect your assets and ensure that they are passed down to your loved ones in the way you intend. However, if you’re not careful, you could make some common mistakes that can jeopardize the success of your trust. In this article, we discuss three of the most common living trust mistakes and how to avoid them.

Mistake No. 1: Haven’t Done It Yet.

“It’s been on the New Year’s resolution for the last three years, but we just haven’t quite got around to it.” We hear this often and we can’t say it enough: start today because no one can predict the future. Estate plans encompass more than just a document that designates who gets what after somebody dies.  Durable Power of Attorney and Medical Directives are two of the documents provided in a properly designed Living Trust that protect you and your end-of-life wishes prior to your death. 

Mistake No. 2: Property Is Not in the Name of The Trust

Too often I have new clients who come in with their 2-inch-thick revocable living trust binder, for which they paid three times more than they should have, that is not providing them the protection they think. Your revocable trust does not need to list every asset to be included; however, with few exceptions, assets must be registered in the name of the trust. This means that your home or income property does not need to be specifically listed in the trust; however, your property must be in the name of your trust to be protected.

Mistake No. 3: Listing Retirement Accounts in the Name of The Trust

For most of our clients, we recommend that they do not list their retirement accounts in the name of the trust or the trust as beneficiary. There are some exceptions to this rule. If you have minor children, listing the trust as beneficiary will allow you, or your successor trustee, to manage the assets for the children until they reach a more mature age. For larger retirement accounts, listing the trust as the beneficiary would allow you to control those assets from the grave for more than the 10-year distribution period allowed under the new tax laws.

At Potentia Wealth, we are more than just investment managers. Through our Life Planning Process, we review our clients trust documents and make sure that 1) they have them, 2) they are properly structured and 3) they will provide the protection and control they intended.

Your family financial health is the goal.

The simple, powerful reason to focus on your financial health is to take good care of yourself and the ones you love. We’ll help you do both.