A revocable trust is a powerful estate planning tool that allows you to manage your assets during your lifetime and efficiently transfer them to your beneficiaries after your death. However, one of the most critical steps in creating a revocable trust is funding it. Without adding assets, even the most carefully drafted trust can fall short of achieving its intended purpose. Understanding the importance of funding your revocable trust is a vital part of safeguarding your legacy, and our attorneys are here to help with that process.
Understanding the Funding Process
Funding a revocable trust means transferring ownership of your assets over to the trust. This process requires updating titles, deeds, and beneficiary designations so that the assets are legally owned by the trust rather than you personally. Creating the trust document is only the first step, as a failure to properly fund it will mean having nothing to distribute upon your passing. Unfunded trusts are more than a nuisance, as they can require your loved ones to go through the costly probate process.
When an asset is not titled in the name of your trust, it falls under the jurisdiction of probate law after your death. Probate is the court-supervised process of distributing an estate. It is known for being time-consuming, costly, and subject to public disclosure. By funding your trust, you ensure that these assets are exempt from probate entirely.
Consequences of an Unfunded Trust
In addition to probate complications, an unfunded trust can lead to unintended distributions that do not align with your final wishes. For instance, if real estate remains in your individual name, it will be handled according to state intestacy laws if you die without a will, no matter what your trust documents say. This could lead to the wrong family member inheriting a substantial part of your estate.
Steps to Properly Fund Your Trust
The process of funding your revocable trust involves a series of carefully coordinated actions. First, review your list of assets and determine which ones you want to include in the trust. Work closely with your legal and financial advisors to change the title of these assets from your individual name to the name of the trust. For real estate, this means preparing and recording new deeds; for financial accounts, it involves contacting your financial institution to update account registrations; and for other tangible assets, it may involve amending beneficiary designations or drafting an asset transfer agreement.
In addition to transferring tangible assets, it is equally important to update policies and contracts that may reference your individual name. This ensures that the trust is recognized as the proper owner, providing a unified estate plan that is both efficient and legally sound.
Talk to Us About Funding Your Trust
As you work to secure your future and protect your legacy, you must pay careful attention to funding your trust. Taking care of this critical step with the help of our firm can make all the difference in achieving a smooth transition of assets to your loved ones. For personalized guidance and comprehensive support in setting up and funding your revocable trust, contact The Law Offices of Robert J. Longchamps, PLLC.