8/12/2019 Not Funding Your Revocable Trust

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MISTAKE #5:

NOT FUNDING YOUR REVOCABLE

TRUST

Having come to the conclusion that avoidance ofprobate and/or a conservatorship is an important goal,

many people choose to use a revocable living trust insteadof a Will as their primary estate planning document. Oncethe trust is executed, most feel they are finished with theirplanning. Not quite. nfortunately, an all too commonmista!e is failing to then "fund# the trust. $unding a livingtrust simply means changing the title on the assets andaccounts that you wish the trust to be able to control and

placing them in the name of the trust. % living trust cannotcontrol assets that it does not own, meaning assets thathave not been "funded#, or re&titled, into the trust. $orexample, changing title on the primary residence from"'ohn and (ary )oe, 'oint *enants with +ights ofurvivorship# to "'ohn and (ary )oe, *rustees of the )oe+evocable *rust dated 'anuary -, 0# means that thetrust is now "funded# with the primary residence. *he same

holds true for title on 1oint investment accounts, ban!accounts and vacation properties.

*herefore, not properly re&titling assets andfunding a revocable trust defeats the primary purposes of

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having a revocable trust2 %voidance of probate at thedeath of the grantor3s4, and/or the need for aconservatorship upon the incapacity of the grantor3s4. Not

funding the trust will also mean that at the death of thegrantor3s4, there may still be a need for a probate process,if for no other reason than to transfer the assets into thetrust post&mortem. Not funding the trust also means thatin the event of the incapacity of the grantor, there will stillbe a need for a conservatorship of the estate, becauseonce again, the trust cannot control what it does not own.

+elated to the mista!e of not funding the livingtrust at the beginning is the issue of ma!ing sure that thetrust remains funded over time. $or example, wheneveryou purchase or refinance a home, most ban!s will requirethe property to be in your own name, and not in the nameof your trust, in order to complete the financingarrangements. Once the financing has been completed,title on the property can be transferred bac! to the trust,but very often the homeowner inadvertently forgets to ta!ethis final step. *hus, an asset that was once properly heldin the trust is no longer in the trust, and therefore nolonger under the control of the trust.

5f you are not sure if your home or other realproperty is held in the name of your trust, simply examine

your property tax bills. 5f the property is in the trust, the billwill usually be addressed to the trust or the trustees in theaddressee section of the bill. $or investment or ban!accounts, a similar reference to the trust or trustees isusually found in the addressee section of the monthly or

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quarterly statements. 5f you are not sure, contact thecounty assessor6s office where the real property is located,or the financial institutions holding the accounts.

5t is the practice at this firm to ma!e sure that allassets that should be titled in the name of the trust aretransferred to the trust at the initiation of the trust byhaving our clients provide us copies of property tax billsand account statements up front. *his allows us toproactively prepare the proper transfer documents on aclient6s behalf and ensure that this mista!e is avoided.

5f you already have a living trust established butfind that some or all your assets have not been placed inthe name of your trust, don6t panic 7 this is easy tocorrect. %ll of the counties, as well as your financialinstitutions are very familiar with the use of living trusts byindividuals, and most already have simple documents thatare used in transferring title to living trusts. *hese

documents, plus a certification of your trust, provided bythe attorney who prepared your trust, are usually all that isneeded to complete the title transfer.

imply put, there are three steps to ensure that aliving trust does for you what you intended2 $irst, createthe trust8 second, fund the trust8 and finally, review the titleon your assets periodically to verify that they are still in thetrust