One of my favorite parts about being an estate planning attorney is the look on our client’s faces when they finish signing the legal documents for their brand-new Trust. They finally have a plan in place to protect themselves, everything they own, and everyone they love — and it is an amazing feeling knowing they have so much control over what happens next. But amid all that excitement, we are quick to let them know they still have one more item on their to-do list: Do not forget to fund your Trust.
All too often, couples think that by signing their documents, the Trust officially controls everything from that moment forward. The reality is that it does not. In fact, the Trust cannot control anything until you transfer ownership of your assets from you to the Trust.
This is what we mean when we say fund your Trust. Today’s blog post will hopefully shed more light on this important conversation.
First Things First — Why Would You Want a Trust?
Trusts are more common now that people are realizing they are not just for the wealthy. Remember, the term “estate” simply refers to everything you own — whether it is $100,000 or $50,000,000. Therefore, everyone has an estate. Furthermore, we believe everyone should have a Trust. Unlike a Will, which springs into effect after probate after you pass away, a Trust is created and managed during your lifetime. So, the immediate benefit is flexibility: You can account for disability or incapacitation, not just death. You can also name successor trustees, and, in the case of Revocable Living Trusts, you can amend and even revoke the Trust at any point during your lifetime.
Trust are more complicated than your standard Will and have plenty of nuances that differ from family to family. But benefits include:
- You can avoid probate
- Creditor and lawsuit protection for beneficiaries
- Plan for incapacity and death
- Can be managed during life and after death
- Minimize estate taxes
That said, none of this matters until you fund your Trust.
How Do You Fund Your Trust?
Once you finish signing your Trust paperwork, our team will walk you through a step-by-step list of instructions on how to properly fund your Trust. When we say “fund,” you are transferring the titles (or ownership) of your assets from your individual or joint names to the Trust name.
Depending on what type of Trust you have established and your unique situation, this could include everything from your house to bank accounts, life insurance policies, vehicles, important personal items, safe deposit boxes, and retirement accounts.
As an example, let us say you have a joint checking account. You would work with your bank to change the names on the account so that instead of your names, it would be owned in the Trust name. The bank will likely need some and possibly all of the Trust paperwork to verify its validity before changing the bank account names. But once they do, that account would officially be under the Trust umbrella. You would repeat these steps for all remaining assets.
While this may seem like a lot of work, most institutions have streamlined the process to make funding your trust very easy. In some situations, you can simply add the Trust as a Payable on Death or Beneficiary. Doing so serves the same purpose and properly funds your Trust. Furthermore, following through with funding your Trust ensures you can take advantage of all the Trust benefits listed above.
Call Leigh Hilton PLLC Today!!
Leigh Hilton PLLC in Denton, TX, is your go-to firm for all estate planning needs and will take into consideration your particular situation. Proper planning of an estate, whether through a Will, Trust, or both, helps ensure your wishes are carried out.