As noted estate planning author and speaker Frank J. Croke points out, more than 4 million trusts are established each year, and 90% of them fail to properly provide for the grantor’s surviving spouse and children. Mr. Croke outlines the following as the 10 biggest errors and omissions found in trusts.

1. Not stating the annual income the surviving spouse is to receive.

This is one of the simplest and most important responsibilities of the grantor.

2. Not stating the investment methods.

If the trust does not state how funds should be invested, half will be invested in bonds, which do not perform as well as stocks in the long run.

3. Not changing the trust’s situs (state).

The grantor may want to grant the surviving spouse the right to change the trust situs in case of relocation.

4. Not providing for travel and living expenses

If the children live far away, providing for the trust to pay the children’s travel expenses may become important if the surviving spouse requires care.

5. Not allowing the surviving spouse to take an additional $5,000 per year.

The IRS allows a person to obtain up to $5,000 each year without losing the tax benefits of the trust. This can quickly cover unforeseen expenses.

6. Not providing for residential needs.

Often, a home or half interest in a home is transferred to the trust to obtain an individual’s maximum federal tax exemption. The surviving spouse should be able to instruct the trustee to sell the home and purchase or lease a new home.

7. Neglecting to provide for the children.

The surviving spouse should be able to authorize distribution of income and principal to the remainder beneficiaries under certain conditions.

8. Not changing the payment method to heirs.

To protect against unforeseen consequences of lump sum distributions to heirs, the surviving spouse should have the right to require that the funds be held in a separate trust for a child.

9. Not changing each heir’s share.

Rather than distributing equal shares to all heirs, it may be more prudent to grant the surviving spouse the right to change distributions for specific reasons.

10. Not exercising intelligent judgment in the distribution of trust assets.

To ensure that the child does not lose the inheritance through mistakes or bad investments, the grantor might state that the children are to receive one-third of their shares at age 25, one-third at 35, and the final third at 45.

Please note that all the above recommendations assume the remainder beneficiaries are the surviving spouse’s natural children. In cases where the surviving spouse is a step-parent, numbers 8 and 9 should not be followed.