Funding, or titling of assets to a Revocable Living Trust (“trust”), is a key component when establishing a trust. Funding assets to a trust means that the asset is either owned by the trust or the trust is the beneficiary of the asset. The funding process requires the account holder to inform the financial institution that the asset(s) need to be titled to the trust, either as owner or beneficiary.
The funding process should begin just after the ink hits the trust documents. Why? Passing away with assets titled in your individual name and not ‘funded’ to the trust, may cause a probate proceeding to transfer the asset to a beneficiary, even though you have a trust. An ancillary document associated with the trust is the Pour-Over Will, which will help pour over inadvertently left out assets back into the trust. However, in order to use the Pour-Over Will, a court action is required with additional time and expense to go through the process.
A very common question often arises about whether all assets need to be titled to the trust. The simple answer is yes. All assets that have a policy number, account number or a title should be properly titled with the trust as owner or beneficiary of the asset. I often get asked if a motor vehicle should be titled to the trust, and the answer is yes. There is a common misconception that if a vehicle is titled to a trust, this will be detrimental if a car accident ensues because the creditor can come after your trust. Regardless of whether your vehicle or other assets are titled to a revocable living trust, a creditor can make a claim against you.
About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.