Q: My mother died a couple of years ago and her estate went through probate even though she had created a Living Trust. The attorney briefly stated that this was due to her not funding the trust? What does that mean?
A: Funding the trust is the process of titling your assets into the name of the trust. The trust is like a safe, it can only protect the items placed within it. If your valuable assets aren’t kept in the safe, those items won’t be protected. However, that safe can be of huge value when used properly. The same is true with a trust.
Your mother purchased the safe, but she didn’t put her assets into it. Because the assets were still titled in her own name, it caused her estate to go through probate. If the assets had been titled under the trust, her estate would have been protected from the cost and delay of probate and the assets would have been distributed according to her wishes.
When you create a trust you must always remember to continually “fund” or title all financial assets to the Trust. In Arizona, if you own assets (investments, securities, cash, bank accounts, retirement plans, etc) in your name when you die and the accumulated value is over $50,000, a probate proceeding will ensue. If you own real property in your name when you die valued over $75,000, a probate proceeding will ensue.
Your trust should be regularly reviewed to ensure it is current with the law and your needs, and to make sure you have titled all major assets correctly.
Contributed by MH Arrowhead, Phoenix and Prescott Estate Planning Attorney and Partner, David T. Eastman
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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.