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In most cases, the answer is “yes,” trustees should seek guidance from an experienced attorney when it comes to the administration of a trust involving sub-trusts. Successor trustees are sometimes not even aware that sub-trusts need to be created and funded upon the death of their loved one or other circumstances outlined in the trust instrument. Mistakes relating to funding can be costly and create many headaches. It is in the best interest of the trustee to get an attorney to assist in moving assets to fund a sub-trust correctly.

Why Trustees Should Seek Help From an Attorney to Fund a Sub-Trust

But trustees do not have to carry out this responsibility alone. An experienced attorney should be consulted for the following reasons:

  1. Funding decisions often have important tax consequences. This may include estate, income, capital gains, and gift implications. Choosing the best assets to fund sub-trusts is crucial to minimizing the tax liabilities of the trust.
  2. Funding of sub-trusts must be timely. Failing to carry out this responsibility in an appropriate amount of time could lead to potential liability or damage to the trust assets.
  3. The process of funding a sub-trust may be complicated if a trustee does not have prior experience in this area. In many cases, it is not as simple and straightforward as one might think. For example, funding does not merely mean drafting a new deed for Anaheim real estate to name the trustee as the holder of the property. There are typically many additional steps involved.
  4. Understanding when a sub-trust should be created is not always abundantly clear. Unless a trustee is very knowledgeable in the area of estate planning, he may not know when or if a sub-trust should be set up.
  5. In many cases, if a sub-trust is not funded properly, there is no opportunity to fix the problem later.

If you are implementing an estate plan that involves sub-trusts and you would like professional guidance, we are here to help. We encourage you to view our client testimonials page today to learn more about how we may be of assistance.

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