Family trusts can certainly be an excellent tool, but they can also be a big headache if not conceived properly or if human factors become overwhelming. If you are building an estate plan, it’s important to understand how even the best-laid plans can turn sour.
When you work to create an estate plan using a family trust, you are inevitably going to involve family. As much as we all love our families, they are all composed of human beings who retain a remarkable ability to complicate matters. Family trusts entail sharing ownership of property with other members of the family, which can be both wonderful and infuriating. As you construct a flimsy trust, be sure to keep in mind the possible conflicts that might arise and plan accordingly. It is always helpful to establish a way to make final decisions when conflicts arise between family members.
Similarly, you should also keep in mind how the human element can complicate the trust creation process. Because all trust documents must be made by a human, it is always possible that errors will make their way into the text. You can save yourself many headaches by taking extra time to review and amend these documents before finalizing them. Although it is certainly possible to amend a trust after creation, it is far easier to do so during its creation.
These are by no means arguments against forming family trusts. But, like all things involving family, there is a significant risk of conflict here that may threaten relationships within a family, which is certainly not what anyone wants. As you work to create an estate plan that involves your family members, be sure to take extra care to avoid future conflicts through due diligence.
Source: Findlaw, “3 Problems With Family Trusts,” accessed Aug. 04, 2017