7th Apr 2010
Funding a living trust or family trust is a critical step in achieving the goals of the trust estate plan.
Failure to properly fund a trust will result in an overall failure of the trust itself to carry out its objective of avoiding probate, saving the family money and time, and making succession to the assets easy.
As a rule of thumb; real estate, tangible personal property, non-retirement bank-savings-credit union-brokerage accounts, stock and bond certificates, and book entry investments MUST GO INTO THE TRUST.
Retirement accounts, life insurance policies, small checking accounts, automobiles, and annuities do not go into the trust.
Unfortunately, after the trust is formed and initially funded, many clients forget about keeping the trust funded.
They will buy new real estate and fail to have it titled in the name of their trust. They will open new accounts, again failing to put the account ownership in the trust’s name.
The unintended result will occur when the client dies, and the family is required to probate the real estate and/or accounts, inspite of the fact that they have a perfectly good trust set up.
If you have a living trust or family trust, you should review it every year and look carefully at funding. A good time to do this is at tax time because you are already getting out files and papers for review for preparation of taxes.
An annual review of your trust’s funding is a critical step in keeping your trust active and effective.
Dwight Edward Tompkins
Attorney at Law
This blog is intended for informational purposes only and is not intended as a substitute for legal advice from a qualified attorney in your jurisdiction.
Please visit my website for more information and resources on estate planning, living trusts, family trusts, wills, powers of attorney, trust funding, and other legal matters concerning estate planning and administration.