One of the best ways to leave assets to your heirs is to establish a trust. But once you've created one, it's important not to let it sit there without reviewing it periodically.
A trust is a legal relationship in which a person or trust company holds property for his or her own benefit or that of a beneficiary.
Trusts can be revocable or irrevocable. A revocable trust can be changed at any time by the person who created it. An irrevocable trust can't be changed or terminated before the time specified in the trust.
You should review your estate plan anytime there's a change in the family or your assets, said Marvin Blum, an estate planning attorney.
Here are things you should consider:
The trustee's role is the most important within a trust. The trustee should be held to the highest standards. This trustee has to handle lots of record keeping, accounting, tax planning and filings, and investment decisions, so you want someone with business skills. You don't want someone who has been convicted of a felony or a crime of moral turpitude, or who is being treated for a drug, alcohol, gambling or other dependency disorder.
The trustee has the delicate job of distributing assets from the trust, so he or she must be able to navigate relationships with beneficiaries, who might be unhappy with how much they receive.
You can hire a professional trustee, such as bank, trust company or lawyer to provide objectivity, of someone connected to your family. It's also a good idea to consider a backup trustee.
Does the trust protect your heirs from lawsuits and divorce claims? "If you leave your inheritance outright to your children, then it's not protected, but if you leave it to your trust for your children and grandchildren, then it is protected from lawsuits and divorce," Blum said.