Your financial planner may have recommended a trust as a tool for your estate planning so that you can protect the value of your assets. However, if you're not familiar with how trusts work, it can be easy to make mistakes that could lead to hardships and confusion for your beneficiaries. Be sure to use these three directives to ensure that a trust works well for those that you plan to share your estate with after you pass away.

Fund It

A major mistake that some people make with regards to their trusts is to not put all of their assets into it. This is something you should do as soon as you set up the trust. For instance, you may need to direct your retirement account to the trust instead of you personally. You don't have to put everything in the trust, but be aware that whatever isn't placed in there could be at higher risk for contention and argument amongst family members and those you know.

File Tax Returns

One thing that could surprise you is that once you set up your trust, you'll have to do a trust tax return for it. The trust is a singular entity and if it is funded each year, you or your executor could need to file a trust tax return for it. Your executor should know this and be prepared to file the paperwork if you should die. Failing to do this will create fees and charges that could diminish the value of everything you have in your trust, so don't let that happen and file appropriately.

Be Specific When Naming Beneficiaries

Without a trust, you could name beneficiaries, and the remaining assets would be distributed according to your wishes and then family ties. When you have a trust, however, you have to be very specific about who will inherit all the funds and assets contained within the trust. If a person is not named as a beneficiary of the trust, they will not see a penny or an item. For that reason, you should take a few days each month to review the list of trust beneficiaries to know that only those you wish to benefit from the trust will be rewarded.

When you're able to take the steps listed above, your loved ones may be able to avoid legal and tax problems after your death. Talking with your financial planner or estate manager can provide you with more things to do so that your estate is well taken care of.