5 tips to set up an accurate trust account

If you decide to include a trust for your beneficiaries as part of your financial plan, here are some tips to ensure it’s accurate.

1. Be flexible. Whether it’s a trust meant for school fees, or to help buy a home, people’s needs change. Your child might grow up and decide not to go to university, or get married. What happens to the money then? Avoid this situation by making the trust flexible enough so the beneficiary can use the money if his life takes a different path.

2. Get the trustees right. Choose more than one and encourage him to make it a business decision, not an emotional choice. Don’t presume you have to use family members and choose people who can make unbiased decisions, such as a professional trustee or a lawyer who acts as a trustee.

3. Ask awkward questions. Divorce, death, and dropping out of school–a lot can happen to derail your best intentions. You need to cover various scenarios and ensure you’re clear on what should happen when things don’t go as planned.

4. Remember, fair and square is impossible. Make sure the trust is set up to benefit those who really need the help. Equal distributions might not make sense if you have a child with a disability, for example. And make sure you discuss it with family members ahead of time, so they know and understand your rationale.

5. Don’t think too far ahead. Revisit trusts every few years or when a major life event happens (e.g., death or divorce). You might want to design a trust for many generations, even when there’s not much money. Remember, it’s often better to have your chain of heirs end at the next generation.