An estate plan centered around a Revocable Living Trust (“Living Trust”) can be extremely beneficial to you and your family. The biggest advantages of a Living Trust are that it avoids probate upon your death, it avoids guardianship court proceedings in the event you become disabled, and it remains private, both during your lifetime and after your death. The catch is that it only works if you properly fund your Living Trust after you create it!
What is funding?
Funding is the process of changing the ownership of your assets so that they are titled in the name of your Living Trust and changing your beneficiary designations on certain accounts and life insurance policies. To accomplish this, you must deed real estate and change bank accounts, brokerage accounts, stocks, and business interests into your Living Trust. You may also need to submit change of beneficiary forms for life insurance policies and retirement accounts to name your Living Trust, or a trust created within your Living Trust, as the primary or contingent beneficiary, as appropriate. There are several factors to consider in deciding on your beneficiary designations.
Funding requires some legwork on your part, but if done correctly and completely, it can result in thousands of dollars in cost savings later on and, more importantly, in your wishes actually being carried out upon your death. And in the event you ever become mentally incapacitated and need help managing your finances, the assets that are titled in the name of your Living Trust can easily be managed by the successor trustee of your Living Trust (who is chosen by you) for your benefit, without having to go to guardianship court to do so.
The consequences of not funding your Living Trust are that some or all of your assets may have to be probated (which means more legal fees and court costs) or, worse, will pass to unintended beneficiaries. Additionally, guardianship court, which is a public and ongoing process, and extremely costly, may become necessary in the event of your disability.
While a Living Trust is only one component of a complete estate plan, it can be one of the most important parts of your plan, IF you take the steps that are necessary for it to work for you the way in which it is intended. That means funding it!
Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law.
This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.