How to Avoid Estate Planning Mistakes in 2025

Even if you could remove all of the emotions about estate planning, like considering your eventual demise and the possibility of incapacity, it can still feel a bit overwhelming. Having an experienced estate planning attorney on your team makes the process far easier, with the knowledge you’re in good hands. A recent article from GO Banking Rates, “4 Expert Insights on Avoiding Estate Planning Pitfalls for 2025,” explains how estate planning helps to avoid family fights, lost assets and legacies.

Estate Planning encompasses your entire life. Wills express how you want assets to be distributed, and trusts minimize taxes by taking assets out of the probate estate. However, an estate plan is more than these two pieces. Estate plans include incapacity plans, caring for children and transferring wealth in a number of ways.

If someone becomes incapacitated and hasn’t created a Durable Power of Attorney, no one can manage non-healthcare matters, from paying utility bills to maintaining their home. A family member must go to court to obtain guardianship to do anything.

Every estate plan should include a Healthcare Power of Attorney and HIPAA release authorization so a designated person can be involved with their loved one’s healthcare, talk with their doctors and be involved in any medical decision-making.

Keeping beneficiary designations up to date. Beneficiaries aren’t just the people you name in a will. Designated beneficiaries are those listed on retirement accounts, investment accounts, life insurance policies and other documents to receive assets when you die. Make sure these names are up to date, especially if you haven’t reviewed them in years. Any account with a beneficiary designation does not go through probate, and your will has no control over these assets.

Things will get messy if beneficiaries on your accounts are no longer in your life. Assets could go to an ex-spouse, an estranged family member, etc.

Choosing your executor with care. Many people get stuck when there is no obvious person to manage this task. An experienced estate planning attorney can help you work through this issue, since a poor choice could put your entire estate plan at risk. Whoever you choose to serve as executor—the person who manages your estate—will need to deal with financial institutions, family members, government agencies and every facet of your life. Many automatically name their eldest child or best friend, which might lead to disaster if they are not available, good with details, fiscally knowledgeable, or able to manage your family’s personalities. Ensure that they are up for the task and also have a backup executor named.

Introduce your family to your estate planning attorney, financial advisor, CPA and other professionals in advance. The people who help you manage the business side of your life will be able to help you better if family members know who they are, how to contact them and have already met them. They don’t have to be friends. However, making introductions in advance can make their work together easier.

Reference: GO Banking Rates (Nov. 17, 2024) “4 Expert Insights on Avoiding Estate Planning Pitfalls for 2025”

Why Is a Special Needs Trust Important for Your Child’s Future?

When you have a child with special needs, ensuring their future care and financial security is a top priority. One way to achieve this is by setting up a special needs trust (SNT), which allows you to provide for your child without jeopardizing their eligibility for government benefits, such as Medicaid and Supplemental Security Income (SSI).

What Is a Special Needs Trust?

A special needs trust is a legal document that holds assets for a beneficiary with special needs. The purpose of this trust is to supplement, not replace, the benefits your child receives from government programs. With an SNT in place, you can ensure that your child has access to additional resources to improve their quality of life, while preserving their eligibility for vital services, as Special Needs Alliance reports.

Who Should Be Involved in a Special Needs Trust?

Setting up a special needs trust involves three key parties:

Donor: The person who establishes and funds the trust, typically the parent or guardian.
Trustee: The individual or entity responsible for managing the trust and using the funds appropriately.
Beneficiary: The person with special needs who benefits from the trust.

You may also name a remainder beneficiary, who will receive any leftover assets if your child passes away.

Why Is It Necessary to Set Up a Special Needs Trust?

You might wonder if leaving money directly to your child or a trusted family member is enough. Unfortunately, doing so could disqualify your child from receiving essential benefits. A special needs trust helps you avoid this risk by allowing you to direct your estate to your child without affecting their eligibility for government programs.

The trust can cover a variety of expenses that improve your child’s quality of life, such as:

Personal care attendants
Special therapies or treatments
Adaptive equipment
Education and recreational activities

What Types of Special Needs Trusts are There?

There are three main types of special needs trusts:

Third-Party Special Needs Trust: Parents or other relatives establish a third-party special needs trust to benefit a child with special needs. These trusts do not require Medicaid payback provisions.
First-Party Special Needs Trust: The beneficiary can establish a first-party SNT using funds from an inheritance, legal settlement, or other source. Medicaid may receive the remaining assets upon the beneficiary’s death.
Pooled Trusts: Nonprofits manage pooled trusts that combine assets from multiple sources, such as third and first-party funding. A pooled trust is a good fallback option when the two previous options aren’t available.

How Should You Fund a Special Needs Trust?

A trust needs adequate funding to serve its intended purpose. Most parents fund the SNT upon death through life insurance, retirement accounts, or savings. However, you can contribute to the trust during your lifetime if you have sufficient resources. Knowing that the trust is funded and ready to support your child’s future needs, this strategy can offer peace of mind.

What are the Responsibilities of a Trustee?

The trustee plays a crucial role in managing the special needs trust. Their responsibilities include:

Managing trust assets
Making payments on behalf of your child (but not directly to the child)
Keeping detailed financial records
Ensuring that the trust does not affect your child’s government benefits

Some families choose a trusted family member, while others opt for a professional or corporate trustee. Either path can be successful. However, you must carefully weigh your options. The right trustee must understand the requirements of a special needs trust and prioritize the child’s long-term well-being.

Can a Special Needs Planning Attorney Help?

Creating a special needs trust involves complex decisions that require careful consideration. A special needs planning attorney can guide you through setting up the trust, planning to fund it adequately and helping you select a trustee. They will also ensure that the trust complies with current legal standards, critical for preserving your child’s government benefits.

Start Building a Secure Future for Your Child with a Special Needs Trust Today

Securing your child’s future starts with creating a plan tailored to their needs. Contact our office today to schedule a consultation with a special needs planning attorney. We’ll help you navigate the process and ensure that your child has the resources for a fulfilling life.

Key Takeaways

Protect Government Benefits: A special needs trust allows your child to receive an inheritance without losing eligibility for vital programs, like Medicaid or SSI.
Enhance Quality of Life: The trust provides supplemental needs like therapies, personal care and recreation, improving your child’s daily experience.
Ensure Long-Term Financial Security: Proper funding ensures that resources will be available throughout your child’s life.
Maintain Control Over Assets: Decide how to manage and distribute assets to protect your child’s future financial stability.
Appoint a Reliable Trustee: Select someone who will manage the trust responsibly and in your child’s best interest.

Reference: Special Needs Alliance “A Special Needs Trust and Your Plan for the Future“

How Does Property Pass to Heirs in Estate Planning?

Not everyone understands how different kinds of property pass to heirs. This becomes problematic when heirs learn they aren’t receiving assets they thought would automatically pass to them — or when taxes or court costs take a big bite out of their inheritance. A recent article from The News-Enterprise, “Understanding how property passes on is crucial to planning,” explains how assets are distributed.

There are four general categories for how property can pass to beneficiaries upon death: joint ownership, POD (Payable on Death) accounts, trusts and wills. Most estates include a combination of these methods. However, every estate plan is different and should be crafted to meet the individual’s unique needs.

A primary residence typically passes to a joint owner, usually a spouse or domestic partner. This is why homes are owned by “Joint Tenants with A Right of Survivorship.” Property owned with a JTWRS title passes to the surviving owner when one of the owners dies. This is often how married couples own homes and joint bank accounts. These rules vary by state, so check with your estate planning attorney to be sure you own your home correctly.

Jointly held assets can also be owned without a right of survivorship. Each person owns a separate interest in the property, and ownership continues after death. When one owner dies, several steps must take place to distribute the decedent’s share to their heirs. A case will need to be opened in probate court, and a will needs to be submitted if there is one. Without a will, the decedent’s shares pass to their nearest heirs by kinship.

If you don’t like your relatives, having a will is necessary to prevent your assets from going to the wrong people.

How assets are owned should be clarified during estate planning. Many cases involve surviving spouses going to court against their own children because the ownership of joint property wasn’t established with a right of survivorship.

When accounts are set up as Payable on Death (POD) or Transfer on Death (TOD), the assets go directly to the person named on the account. It sounds simple and speedy. However, there are some risks. The assets may return to the taxable estate if the intended beneficiary dies before the primary owner. If the beneficiary receives means-tested benefits because of a disability, they might become ineligible for benefits like SSI or Medicaid. Even a small distribution could disrupt years of careful planning, if it is directly into their own name.

Trusts are commonly used to pass assets privately and smoothly. The distribution directions follow the trust’s language and can be tailored as needed. Assets can be distributed based on meeting certain conditions, like getting married or attaining a college degree. A trust can also distribute specific percentages of the trust at certain ages.

Assets not distributed through the three methods described above pass through a will and the probate process. If there is no will, the laws of the state determine who inherits the property.

An experienced estate planning attorney uses well-formed strategies to help clients consider how assets are best passed to their heirs. Keep in mind that every situation is different, so what your neighbor or best friend may have done may not be suitable for you and your family. A consultation with an estate planning attorney is the best way to be sure that your wishes are followed.

Reference: The News-Enterprise (Oct. 12, 2024) “Understanding how property passes on is crucial to planning”

Why Gen Z Needs to Pay Attention to Estate Planning

Gen Zers may still be young, ages 17–27. However, this doesn’t mean some don’t have ownership and assets to protect with estate planning. Medical emergencies and car accidents happen to people of all ages. An estate plan protects the person as much as their property. The sooner you have a plan in place, says a recent article from yahoo! finance, “Why Gen Z Should Be Thinking About Estate Planning,” the better.

For many young adults, estate planning is like buying rental insurance. You don’t expect to deal with a fire or have your home broken into. However, having insurance means if such events happen, your possessions will be insured, and you’ll be made whole.

Gen Zers who are signed up for employee benefits like 401(k)s or retirement plans already have assets to be passed to another person if they should die young. These accounts typically feature beneficiary designations, so they should be sure to have those completed properly. Many Gen Zers name their parents or siblings as their beneficiaries at this point in their lives. The future may bring new relationships, marriage and children, so they must update these beneficiaries throughout life.

While practically everyone using a cell phone or computer has digital assets, Gen Zers are likely to have more digital currency and crypto in digital wallets. They may have intellectual property on platforms, including TikTok or YouTube. These assets need to be protected in a digital estate plan. The information required to access these accounts should not be in a last will and testament. However, they should be documented so the assets are not lost.

Other digital assets don’t have any value. Users don’t have the right to transfer the assets, like social media accounts or music files. Having a conversation with a digitally savvy person about these assets and providing them with login and account information is an integral part of an estate plan.

Gen Zers do need a will. Without a will, the estate will get tangled up in probate, a court process where the laws of your state determine who inherits any possessions. This takes time and court fees can add up quickly.

Having a will created with an experienced estate planning attorney encourages a review of assets, providing a perspective of finances that one might not otherwise have early in their career.

Estate planning also includes planning who will make medical and financial decisions in case of incapacity. These documents, including a Power of Attorney, Healthcare Proxy, Living Will and other documents, are state-specific. Once someone becomes a legal adult, neither parents nor siblings can be involved with medical care or handle finances, unless these documents are created and executed. Trusted friends can also take on these roles.

A young adult should make an appointment with a local estate planning attorney. They’ll provide guidance through the process. Regardless of age and stage, having a plan creates peace of mind for young adults and their family members.

Reference: yahoo! finance (Sept. 17, 2024) “Why Gen Z Should Be Thinking About Estate Planning”

How Does an Estate Plan Address Young Beneficiaries?

Certain beneficiaries require more intentional estate planning than others. While the law sets the age of adulthood at 18, specific testamentary instruments can redefine at what age a beneficiary is considered an adult. A recent article from The News-Enterprise, “When planning for young beneficiaries, consider all options,” explains how this works.

Young beneficiaries, especially 18-year-olds still in high school, are still immature, and their brains are still developing. Add a strong dose of grief to a teenager’s life, and even a bright, stable adolescent may not make good decisions.

Young adult beneficiaries are categorized in two ways: primary and contingent.

A primary beneficiary is one who the testator or grantor expects to be a young beneficiary at the time of distribution of assets or who is young when the estate planning documents are executed. This is typically the parents of young children or grandparents who intend to leave property to young grandchildren.

Contingent beneficiaries are those who are not anticipated to receive property as young beneficiaries. However, they could inherit if a primary beneficiary dies, such as when a grandchild receives an inheritance following their parent’s death.

Even for contingent beneficiaries, some level of planning needs to be done to define the age of majority and provide options for distribution. This is done through an immediate split of assets, with assets going into a general needs trust or a common pot trust.

Assets are most commonly left to young beneficiaries through an immediate split of assets upon estate distribution. Assets are held in a separate trust for each beneficiary, with a trustee appointed for each trust. Assets within the trust are typically available for the child’s health, education, maintenance, or support until the child reaches the predetermined age.

Upon reaching the age defined by the trust, the child may receive the assets either outright or incrementally over a period of time.

Another option is to use a common pot trust. This is used for parents with multiple minor children. This type of trust allows the assets to remain in one trust to be used for the needs of all children until a triggering event, such as the youngest child reaching age 18. At that time, the remaining trust assets are split into as many shares as there are beneficiaries, and the shares are distributed according to the remaining instructions. Each separate share is usually left in an ongoing general needs trust until a certain age.

Leaving property in trust for young beneficiaries doesn’t cut off their ability to use the money property. The trustee can continue to use the assets for the beneficiary’s care. However, whatever is left is distributed to the beneficiary upon reaching the distribution age.

Your estate planning attorney can help you determine the best way to structure trusts for your children or grandchildren based on your wishes and their ages. By redefining the age of majority and outlining specific directions for distributions, young beneficiaries can receive the most value from their inheritance.

Reference: The News-Enterprise (Feb. 10, 2024) “When planning for young beneficiaries, consider all options”

Essential Estate Planning Considerations for Minor Children

Estate Planning for Minor Children

It is paramount for parents to have an estate plan that not only takes care of their personal and financial matters but also addresses the well-being of their minor child or children. Delving into estate planning considerations can be overwhelming, especially when young children are involved. This guide will provide you with a comprehensive understanding of estate planning for minors.

Estate Planning: Why Is It Essential for Parents with Young Children?

Estate planning for parents with young children involves setting up mechanisms to ensure that, in the event both parents pass away, their children will be cared for in the desired manner. Many parents overlook this critical aspect. However,ensuring their children have the protection and support they need is vital.

What Is a Trust and Why Is it Important for Minor Children?

A trust is a legal entity that holds and manages assets for the benefit of certain persons or entities, typically the minor child or children. A trust may be established to ensure that your child receives the inheritance at an appropriate age. The trustee is also responsible for managing the trust assets for the child’s benefit until they reach the age of majority.

Appointing a Guardian: Who Will Care for Your Children in the Event Both Parents Die?

Choosing a guardian for your child is one of the most critical decisions in an estate plan. The guardian is entrusted with raising your child if both parents die or become incapacitated. Young parents, especially, need to decide who they would trust to raise their children if both parents are not around. Appointing someone you trust and discussing your wishes with them beforehand is essential.

Power of Attorney: Who Makes Decisions on Your Behalf?

A power of attorney is a legal document that allows a person to act on your behalf if you become incapacitated. There are different types of power of attorney, such as financial power and medical power. The former deals with financial matters, while the latter allows someone to make medical decisions for you.

Special Needs Planning: What If One of Your Children has Special Needs?

If you have a child with special needs, specific considerations should be included in the estate plan. A special needs trust is a tool parents can use to ensure that the inheritance does not disqualify the child from receiving essential government benefits. Estate planning for special needs children requires meticulous attention to detail to safeguard their interests.

Life Insurance: Ensuring Financial Security for Your Children

Life insurance plays a crucial role in estate planning for parents with minor children. In the unfortunate event that one or both parents pass away, the life insurance proceeds can provide financial stability for the children. This ensures that they have the means for education, healthcare and other essential needs.

The Last Will and Testament: A Fundamental Estate Planning Document

A last will and testament primarily directs how your personal property should be distributed after your death. Parents need to stipulate their desires, especially regarding their children’s inheritance.

Beneficiary Designations: Make Sure That Assets Go Where You Want

Ensuring the correct beneficiary designation on assets, like retirement accounts, is vital when drafting an estate plan. Incorrect or outdated designations can result in unintended consequences, potentially sidelining the intended benefits for your minor children.

Trusts for Children from Previous Relationships

For parents with children from previous relationships, establishing a trust can ensure that all children, irrespective of their biological ties, are treated equitably. This ensures that the inheritance and trust assets are distributed according to the parent’s wishes.

In Conclusion: Key Takeaways

Establishing an estate plan is vital for parents with minor children.
Setting up a trust can protect a child’s inheritance until they reach a suitable age.
Appointing a trusted guardian ensures that your children are in safe hands should anything happen to both parents.
Power of attorney is essential for someone to make decisions on your behalf if you become incapacitated.
Parents with special needs children should consider setting up a special needs trust.
Life insurance is crucial for the financial security of your children.
Always ensure that beneficiary designations are updated and correct.
Trusts can be especially useful for parents with children from previous relationships.

To ensure that your estate plan aligns with your desires and the well-being of your minor child or children, consider consulting an estate planning attorney or law firm. They can guide you through the intricate details and help you make the best choices for your family’s future.

Estate Planning in Seven Steps

From defining financial objectives and understanding legal issues to safeguarding assets and establishing directives, every step in the creation of an estate plan is a brushstroke in the painting of your personal legacy. A recent article from Market Business News, “Crafting Your Legacy: 7 Steps in the Estate Planning Process,” describes the process of creating what is essentially a testament to protect loved ones.

Create an inventory of assets. You’ll need to be meticulous about this to ensure that all your assets are accounted for. This includes properties, investment accounts, items of value and sentimental possessions. It should include detailed descriptions and appraisals. This forms the foundation of your estate plan.

Consider your family’s needs after your death. Anticipate your family’s financial, practical, and emotional needs. Consider things like educational expenses, healthcare costs, ongoing support for basics, and, depending on your situation, recreational activities. Address this concern in your estate plan, so your family will have a secure foundation after your passing.

Select beneficiaries. This is simple in some cases and more complicated in others. You may have a traditional family or one including non-family members who are like family to you. Are there charitable concerns you want to address?

How do you want your estate divided? Be specific to avoid confusion and ensure that assets are distributed according to your intentions. Language needs to be specific and clear, with no room for ambiguity.

Store documents properly. Safeguard estate planning documents, which include your will, Power of Attorney, Health Care Power of Attorney, Living Will and others, in a secure location, like a fire and water-proof home safe. Do not put them in a bank safe deposit box, as the bank may seal the box upon your death and not allow representatives to access the box’s contents. Talk with your estate planning attorney about their recommendations.

Update your estate plan on a regular basis. Life changes, and so should your estate plan. It should be reviewed every three to five years or whenever there is a life event, including marriage, divorce, birth, or changes in your financial situation. Keeping an estate plan updated ensures that it remains relevant to your life.

Seek help from an experienced estate planning attorney. An estate planning attorney will help you navigate the complexities of legal documentation, tax implications and probate. You’ll want to be sure that your estate plan aligns with state laws. The knowledge of an estate planning attorney will provide you with peace of mind, knowing you’ve done the right thing to protect your family and ensure your legacy.

Reference: Market Business News (Oct. 28, 2023) “Crafting Your Legacy: 7 Steps in the Estate Planning Process”

Special Needs Planning for Beneficiaries with Disabilities

Families who aren’t knowledgeable about special needs planning often disinherit a disabled child because they don’t know the other options for protecting their offspring, reports a recent article, “Beneficiaries with disabilities require special planning” from The News-Enterprise. With proper planning, disabled beneficiaries can receive an inheritance and remain eligible for government benefits.

For estate planning, disabled beneficiaries are people who are disabled and receive public benefits, should be receiving public benefits, or are likely to need public benefits in the future. These public benefits are means-tested and determined by financial eligibility. They typically include Social Security Insurance and Medicaid. However, they may also include Section 8 housing, food stamps and other income or asset-based assistance.

Some people think they can replace public benefits with an inheritance. However, realistically, the disabled person will likely use up their inheritance and then be left only with public benefits and no resources to cover any other needs.

The best practice is to create a third-party supplemental needs trust for the beneficiary to receive an inheritance. This differs from a first-party supplemental needs trust and an ABLE account, since both have requirements based on the beneficiary’s age. The third-party supplemental needs trust can be funded regardless of the beneficiary’s age.

Third-party supplemental needs trusts don’t have a payback provision to the state. This is because a third party has funded the trust and not the beneficiary. Therefore, the assets within the trust aren’t required to be repaid to the state upon the death of the beneficiary. This leads to another benefit—the third-party supplemental needs trust may be left to a contingent beneficiary upon the death of the primary beneficiary.

Some families may leave the bulk of their estate to their disabled child, while the other children will be contingent beneficiaries.

A third-party supplemental needs trust is relatively flexible to set up and administer for future trustees. Your estate planning attorney can create one to include basic protective provisions giving the trustee maximum flexibility or set it up with instructions for an advisory committee, care planning and housing requirements.

Not all disabled individuals receive income or asset-based public benefits. In this case, the inheritance can be managed in one of two ways. First, planning documents could require the beneficiary’s inheritance to be left in a third-party supplemental needs trust, either because the planning anticipates a future need for benefits or because the beneficiary cannot manage their assets.

Another option is to leave the inheritance to the beneficiary outright, with a “trigger trust” provision. This means the third-party supplemental needs trust is set up within the planning document—a will or a trust—and will be “triggered” if the beneficiary is eligible for financial-based public benefits at the time of distribution.

The benefit of a trigger trust is that any beneficiary, including those who are healthy and capable of managing their lives when the documents are executed, can have the protection of a third-party supplemental needs trust, if and when needed.

The downside of a trigger trust is that once assets are distributed to the beneficiary outright, the option for a third-party trust is no longer available.

An experienced estate planning attorney will help the family with a disabled member plan for the future.

Reference: The News-Enterprise (July 8, 2023) “Beneficiaries with disabilities require special planning”

Who Gets My Bank Account When I Die?

Investopedia’s recent article, “What Happens to Your Bank Account After Death?” details the common ways you can set up your account to make things as simple as possible after your passing and what will happen if you don’t set up anything beforehand.

The easiest way to pass your bank account on to your heirs after your passing is to make sure you name payable-on-death (POD) or transfer-on-death (TOD) beneficiaries on your accounts. This ensures that they won’t have to go through probate. When you name a payable-on-death beneficiary, they won’t have direct access to your money until you die. You can change the named payable-on-death beneficiary at any time.

A bank will frequently freeze an account upon notification of the holder’s death to prevent fraud. Therefore, it’s important to have a payable on death (POD) beneficiary designated to ensure that your loved ones can access your money if you pass away.

Adding account holders to your bank accounts can make things easier for your heirs after your passing. However, it can have downsides while you are living. Note that most joint account holders are considered joint tenants with rights of survivorship (JTWROS). That means the account passes to the survivor(s) when an account holder dies.

The other people on your account may also be subject to gift tax and can withdraw funds from the account whether or not you want them to. The assets in the account are legally considered theirs to qualify for government programs or if they have a creditor with a judgment against them.

If you don’t set up anything before your passing, your accounts will go to probate and be distributed according to state probate law. Without a will, an executor will be appointed who will be responsible for paying off any creditors of the deceased. The remaining money will be distributed to the spouse and children of the decedent.

However, if the deceased has named a payable-on-death (POD) beneficiary for the account, they will get access to it immediately. They simply need to show the bank a death certificate and identification.

If you have a simple estate with no assets besides a bank account, adding a payable-on-death beneficiary to your account(s) is the easiest way to avoid probate. Ask an experienced estate planning attorney for assistance.

Reference: Investopedia (June 13, 2023) “What Happens to Your Bank Account After Death?”

What is the Purpose of a Blind Trust?

One type of trust offers a layer of separation between the person who created the trust and how the investments held in the trust are managed. The trust’s beneficiaries are also unable to access information regarding the investments, says the article “What is a Blind Trust?” from U.S. News & World Report.

The roles involved in a blind trust are the settlor—the person who creates the trust, the trustee—the person who manages the trust—and beneficiaries—those who receive the assets in a trust.

Blind trusts, typically created to avoid conflicts of interest, are where the settlor gives an independent trustee complete discretion over the assets in the trust to manage, invest and maintain them as the trustee determines.

This is quite different from most trusts, where the owner of the trust knows about investments and how they are managed. Beneficiaries often have insight into the holdings and the knowledge that they will eventually inherit the assets. In a blind trust, neither the beneficiaries nor the trust’s creator knows how funds are being used or what assets are held.

Blind trusts can be revocable or irrevocable. If the trust is revocable (also known as a living trust), the settlor can dissolve the trust at any time.

If the trust is irrevocable, it remains intact until the beneficiaries inherit the entire assets, although there are some exceptions.

In some instances, irrevocable trusts are used to move assets out of an estate. Settlors lose control over the holdings and may not terminate the trust or change the terms.

Blind trusts can be used in estate planning if the settlor wants to limit the beneficiaries’ knowledge of the trust assets and their ability to interfere with the management of the trust.’

People who win massive lump sums in a lottery might use a blind trust because some states allow lottery winners to preserve their anonymity using this type of trust. They draft and sign a trust deed and appoint a trustee, then fund the trust by donating the winning ticket to the trust prior to claiming the prize. By remaining anonymous, winners have some protection from unscrupulous people who prey on lottery winners.

One drawback to a blind trust is the lack of knowledge about how investments are being handled. The blind trust also poses the issue of less accountability by the trustee, since beneficiaries have no right to inspect whether or not assets are being managed properly.

Do you need a blind trust? Speak with an experienced estate planning attorney to discuss whether or not your estate would benefit from a blind trust. If you want to separate yourself from investment decisions or would rather beneficiaries don’t know about the holdings, it might make sense. However, if you have no concerns about privacy or conflict of interests, other types of trusts may make more sense.

Reference: U.S. News & World Report (June 1, 2023) “What is a Blind Trust?”

Estate Planning Blog Articles

Estate & Business Planning Law Firm Serving the Providence & Cranston, RI Areas