Many of the clients we serve at Legacy Law Centers use a revocable living trust instead of a will or joint ownership to plan how their assets and other valuable property will be distributed among their family and other beneficiaries of their estates.
When we help clients set up their trusts to ensure that everything is in order, they can avoid the costly and time-consuming process of going to court to establish conservatorship or guardianship (in cases involving incapacity) or to probate the estate ( after a person passes away).
While trusts can greatly benefit your family in their time of need, many people fail to properly fund the trust, which can result in the accounts and property left in the trust going through the court system.
How Do I Fund a Trust?
Funding a trust involves transferring accounts and property from your name into your trust. You should also change beneficiary designations so that your trust is named as your beneficiary. Our lawyers can discuss your estate plan to identify all of your accounts or property with a beneficiary designation and explain how to properly transfer it outside of the probate process.
To fund a trust, you can:
- Change the title of the asset from your individual name to the name of your trust.
- Assign your interest in an asset without a title to your trust. This works for assets like artwork, jewelry, collectibles, and antiques.
- Change the primary or contingent beneficiary of the asset to your trust.
What If I Forget to Include Assets in the Trust?
While people generally want to set up trusts to avoid conservatorship and probate, we often encounter individuals who thought they were done once they signed their name on the trust agreement. Unfortunately, by not taking the crucial step of changing titles and beneficiary designations for accounts and property, the loved ones of these individuals will be forced to go to probate court in the event of incapacitation or death.
Which Assets in Trust Do I Need to Fund?
If you are using a trust to leave assets to your family and other beneficiaries, then you need to consider funding the following:
- Bank and credit union accounts
- Real estate
- Life insurance
- Business interests
- Safe deposit boxes
- Investment accounts
- Personal effects
The following assets don’t need to be funded into your trust:
- IRAs and other tax-deferred retirement accounts
- Interests in professional corporations
- Foreign assets
- Incentive stock options and Section 1244 stock
- UTMA and UGMA accounts
Benefits of Properly Funding Your Trust
With advice and guidance from our seasoned lawyers, you can experience the following benefits of a trust-based estate plan:
- The trustee, not a conservatorship or guardianship judge, will manage your trust assets on your behalf if you become mentally incompetent. This will ensure your health care wishes are respected.
- The trustee will take control of your trust assets after you pass away and will manage and distribute the accounts and property to your chosen beneficiaries without court involvement.
- It is easier to update your wishes with a trust than it is with payable-on-death or transfer-on-death accounts.
Our compassionate and skilled estate planning lawyers at Legacy Law Centers are here to answer your questions and devise a strategy that protects your best interests and preserves your legacy. Call our law firm today at (571) 777-1000 to schedule a complimentary case review.