There are many great reasons for having a revocable living trust as part of your estate plan:
- controlling the distribution of your assets,
- avoiding the cost and aggravation of probate,
- making sure your surviving spouse has sufficient money to live on while protecting the inheritance of your children from a previous marriage,
- protecting your children from losing their inheritance to creditors or divorcing spouses, and
- keeping the government’s nose out of your private business.
But the document you signed in your lawyer’s office does nothing all by itself; you have to do a little bit of work to make sure your assets will actually be controlled by the terms of your trust. We in the estate planning business call that “funding” your trust.
When you executed your trust, you essentially created a lovely, expensive box. The box is magical, but completely empty.
So you have to pick up all the assets you have lying around in your individual name (such as real estate, bank accounts, investment accounts, oil & mineral interests, savings bonds, etc.) and put them into your magical trust box. Once those assets are in your trust box, they transform from unruly individually-owned assets that want to wreak havoc on your estate plan into well-behaved trust assets that will avoid probate and do exactly what you told them to do in your trust document.
So, how do you get those assets into your magical trust box? Generally, by doing a bunch of paperwork.
New deeds will need to be executed transferring your real property and oil & mineral interests into your trust. Banks and investment firms will need a copy of your trust and additional paperwork to change the ownership on your accounts. In some cases, you’ll get new account numbers. Annoying, I know.
Sometimes the bank won’t allow you to put your account into your magical trust box (Capital One 360, for example, no longer opens accounts for trusts) and you may have to move your account elsewhere. Your HOA or condo association may require that you get its approval before transferring your deed into your magical trust box. And some county property tax appraisers require you to complete their form when you transfer the ownership of your property into to your trust.
So, it takes a little bit of work to corral those rowdy assets, but it’s much easier for you to do it now than it is for your loved ones to do it later.
If you’re enrolled in our annual maintenance plan, Estate Protection Plan (EPP), we’ll review your assets every year to help you make sure everything you had lying around in your individual name gets put into your magical trust box. But whether you’re enrolled in EPP or not, we can provide as much or as little assistance as you need at a reasonable hourly rate. We can take care of everything for you, just provide a little guidance when needed, or anything in between.