You’ve Signed Your Trust Document. Now What?

 Congratulations!  You have finally gotten your estate planning in order.  After years of procrastination, you went to see an attorney (one who specializes in estate planning) and had your important documents drafted, including a Revocable Living Trust.   Your attorney no doubt shared that one of the main reasons that a Revocable Living Trust is a good planning tool is so you (or, really, your heirs) can avoid the time and money to go through the probate process.  So, you signed or executed your new Revocable Living Trust and you are done – or are you? 

In order to truly avoid probate there is another critical step that many people (and even some attorneys) unfortunately skip.  Once your Revocable Living trust is in place, there is a process known as “funding your trust” that is just as important as signing.  Funding a trust is a process where you, preferably with the help of your attorney, make sure that your taxable assets are owned by the trust.  If your assets are not owned by the trust at death – probate will most likely be required.   

Funding a trust may include: 

  • Re-titling property such as a house to your trust via a Quit Claim or Warranty Deed
  • Re-titling your taxable investment accounts such as a brokerage account to your trust
  • Updating beneficiaries of IRA’s, 401k’s and life insurance (assets such as an IRA or 401k cannot technically be “owned” by your trust)

If you don’t follow through and “fund” your trust, chances are you might have purchased really expensive paper from your attorney.  

One last note:   As you acquire new property or open new investment accounts, be sure to consider whether the trust should own or be a beneficiary of the asset.

Please discuss legal matters with the appropriate professional.