One of the most frequent mistakes we see in estate planning is not funding your trust. Many times children or spouses come into the office after the death of a loved one with a trust, but when we begin looking at the assets, the trust was never funded. A family who thought they could avoid probate is now frustrated when we tell them that all the planning and money spent on estate documents is mostly irrelevant. Without having funded the trust, loved ones still have the expense and headache of probate. Additionally, since an estate now has to be probated, the potential for litigation and fighting increases as the process becomes a public one instead of a private affair.
Funding your Trust is not difficult, but it does take effort and time. Consider some of the assets that can be put into a trust:
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- Bank accounts – many institutions will allow you to retitle your accounts into the trust’s name, but if they don’t you may have to name the trust as Payable on Death.
- Checking
- Savings
- Money market
- Stocks
- Investment Accounts – accounts held in brokerages. Many institutions have policies that do not allow them to simply retitle an account and instead require a new account be established in the name of the trust. In either case, this only requires paperwork and has no impact on how your account is treated for investments purposes or taxes.
- Real Property – Primary Residence, vacation homes, timeshares, rental properties, etc. can be transferred into the trust’s name. This is especially important when you own property in multiple states.
- Business Interests – LLCs, Interests in Corporations, Copyrights, Trademarks can be assigned to your Trust.
- Bank accounts – many institutions will allow you to retitle your accounts into the trust’s name, but if they don’t you may have to name the trust as Payable on Death.
Other assets should not be, or cannot be, placed directly into the name of the trust, but should name a Trust or individual as beneficiary when funding your trust.
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- Life Insurance
- 401(k) Accounts
- IRA and ROTH IRA Accounts
- Retirement Plans outside of a brokerage
- Some Annuities
Lastly, there are assets that should generally stay outside of the trust. There are exceptions, but usually these assets do not need to be put into a trust:
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- Boats
- RVs
- Motor Vehicles
- Airplanes
While the above are general recommendations, the above lists are broad and do not apply to everyone or every situation. There is no “one-size-fits-all” in drafting an estate plan, nor in proper asset management. Regardless of what kind of trust you have or which assets you have though, it is important to fund your trust to get the benefit of the planning you have already done. Let Grissom Law help you establish the estate plan that works for you, from initial planning to fully funding so that you have peace of mind.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney client relationship between you and Grissom Law, LLC.