A trust, when boiled down, is just words on paper. It is critical to have the right words, but words are all it is. So if you have a trust, and you signed the document (i.e. you “executed” the trust), do you think you are all done?
The answer is no.
Making sure your assets are controlled by your trust is a critical element in ensuring your estate plan works the way you intend it to. The process of having assets controlled by your trust is called funding.
So how does anyone know what is in the trust (i.e. “funded” to the trust) and what is not?
The answer is how the asset is titled. You bank accounts will no longer read “Mary & Joseph Smith,” it will read “Smith Living Trust.” The deed to your property will also read “Smith Living Trust”. All the identifying information (titles, deeds, statements) will read “Trust” rather than an individual’s name.
If the asset remains in the person’s name, there is a good chance that the family will have to still go through the probate process (avoiding probate is one of the main reasons people implement a trust in the first place), since the trust does not control that asset.
We understand the importance of fully funding a trust, and work with our clients to not only fund their trusts when they initiate the trust, but also invite our clients back for a 3-year review to make sure there has not been any new investments that did not make it in. The worse conversation is the one with the family after you’re gone, and I have to let them know that we still have to go through the probate process, even though a trust was in place.
Make sure your trust is fully funded, so the plan you have in place works the way you intend.
Contributed by MH Albuquerque, Santa Fe and Las Cruces Estate Planning Attorney, James P. Plitz.
What the Attorneys of Morris Hall Can Do For You:
The attorneys at Morris Hall have 100’s of years of combined experience ensuring that families’ assets are protected from probate, unnecessary taxes, creditors, ex-spouses and Medicaid spend-down. The attorneys also help those in Arizona and New Mexico to apply for and receive Medicaid assistance and Veterans Benefits. 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.