Many people wish to ensure the assets they have accumulated during their lifetime are passed on to their loved ones following their deaths.
One such method individuals employ to accomplish this task is through the establishment of a living trust. Unfortunately, a living trust can also be a conduit to fraudulent activity.
Fortunately, however, there are safeguards those who draft living trusts can use which might prevent such shady activities from happening.
Christopher Johnson, Trust Lawyer, invites readers to learn how about these essential legal documents and the steps that can be taken to prevent fraud from occurring after they are adopted.
The Definition Of A Living Trust
A living trust referred to in legal terminology as an irrevocable trust, is an official legal document an individual establishes during their lifetime which places said person’s assets such as property and financial accounts are overseen and dispersed by a bank, financial institution or legal representative known as a Trustee.
The Reason Living Trusts Are Created
Arguably, the biggest reason people established living trusts is to ensure their assets do not have to pass through probate. Probate is a legal process subjected to specific state regulations in which a court verifies the validity of the deceased individual’s will.
In instances where the decedent died without having authored a will, probate is conducted to identify the person’s rightful heirs and determine the individual or party that will bear responsibility for resolving said individual’s finally legal and financial affairs.
Probate could be a lengthy and complicated process, especially if the decedent passed without a will if the authenticity of the said document can be challenged or the deceased individual’s heirs challenge specific tenets of the legal instrument.
Moreover, the process could be quite expensive. Should any issues or challenges arise, the duration of time needed to resolve them might ensure that legal fees are excessive.
How Living Trusts Work?
After the author of the living trust passes away, the individual or institution said individual appointed as Trustee transfers assets to those named as beneficiaries when the document was first established.
In many cases, this process should not last longer than a few weeks and typically requires the designated recipients to present appropriate identification and whatever other documentation is mandated by the Trustee to complete the transfer process.
How A Living Trust Could Serve As A Conduit To Fraud
Fraud against a living trust may arise under several different circumstances. One of the most common is unscrupulous and dishonest behavior committed by the Trustee.
The Trustee is sworn to execute fiduciary responsibility for the trust and its assets. In legal terms, this means said individual or organization’s role is to ensure that decisions about the belief are made, and the beneficiaries best interests appropriate its assets.
That being said. However, the Trustee is given the ability to manage the assets under the trust’s purview while said document is in legal effect. A Trustee intent on committing an act of mischief may misappropriate or irresponsibly manage said assets.
In addition to disreputable Trustees, living trusts might serve as prey to exploitative persons intent on running scams.
One such noted scam involves unsavory individuals posing as legal or financial experts possessing knowledge on how to properly establish a living trust.
In some cases, said individuals might meet with unsuspecting persons and convince them to divulge personal information regarding financial accounts or other assets.
Another fraudulent practice involves obtaining the Trustee’s permission to invest the trust’s assets in stocks or funds that could return the shady character a large sum in commissions.
Moreover, risky investments could result in the trust losing financial value.
Methods Of Avoiding Living Trust Fraud
When designating a Trustee, the living trust author should always appoint someone, or an organization said an individual has implicit faith in. That said, designation of an entity the trust’s bearer deems honorable and principled does not always prevent instances of greed or malfeasance.
Upon the appointment of a Trustee, the trusted author should employ further legal requirements like mandating the Trustee keeps accurate records of any financial transactions related to the trust, and that said individual or organization keep their assets separate from those of the trust in question.
Should the trust’s author or beneficiary detect that the Trustee may be acting unscrupulously, the matter should immediately be brought to the attention of a qualified estate and trusts attorney.
Trust authors may avoid involvement in a scam by performing their due diligence on all individuals who may be involved with establishing the document. Scammers often seek would-be prey out through advertisements and other forms of solicitation.
If the actions of said individuals appear to be aggressive or can be perceived as risky, it would behoove the prospective trust author not to sign any documents or enter into any agreements with such persons until after speaking with a legal or financial advisor.
If you are interested in creating a living trust, Christopher Johnson, Trust Lawyer may be able to help. In many cases, writing a living trust is not a complicated process. That said, however, completing the procedure will require a client to fill out various forms, as well as inventory the assets said individual wishes for inclusion in the trust.
We can help you accomplish this task and help you create a legal document that could ensure your assets remain with your loved ones after your passing.