ARTICLE: 5 Trust Funding Dos and Don’ts In The New Year

5 Trust Funding Dos and Don’ts In The New Year

Do you have an estate plan right now or are you considering creating one this year? Does it include trust planning? Trust agreements can be a powerful tool in your estate planning arsenal. Depending on the type of trust you create with your estate planning attorney there are many goals you can create and achieve. For example, you can ensure that you are protected from the high costs of long-term care or create a legacy for your future grandchildren or ensure the children from your first marriage are protected when you remarry. 

There are many benefits to trust planning. It can be a critical part of your estate planning and your estate planning attorney can discuss the benefits with you in your planning meetings. What is important to remember, however, is that your trust agreement will only reach your goals if it is “funded”. Funding is the process of retitling your assets, which are most likely held in your name or a spouse’s name, into the name of your trust. Taking this step ensures that your trust will be able to have control of your assets in the event of your incapacity or death. Without this step, you are at risk of needing court involvement to fund the trust.

We often receive questions from our community, clients, and friends on trust funding and we know it may be confusing. Let us share five key funding “dos” and “don’ts” with you right here in our blog.

1. Do disclose all of your assets to your estate planning attorney. Your attorney can only plan to protect what you disclose to him or her. If you do not tell your attorney about an asset, or assets, then it may not be able to be protected. It also may negatively impact your estate planning future. This is a confidential relationship and you need to openly disclose all of your assets so that, together, you may create the right estate plan for you.

2. Don’t solely rely on beneficiary designations. While there may be reasons to make a child or grandchild a co-owner or beneficiary on a specific account, do not rely on this as an estate plan. There is no duty on the co-owner or beneficiary to share the money in that account at your death with others, even if you have a trust agreement. Further, there may also be tax consequences on this person if he or she tries to follow your wishes through this type of planning.

3. Don’t forget to update your funding when you have a new asset, or get rid of an old one. Let your attorney know what you own as well as what you no longer own. This is not only an important part of trust funding, but an important part of your estate planning overall. Especially if you leave a certain asset or monetary amount to a specific person, your attorney needs to be advised if you no longer own this asset or have this money so that, together, you may update your estate plan to reflect these changes.

4. Don’t let an asset “go missing”. Trust funding is not always an easy process. It may take weeks, if not months, for trust funding to be completed. You need to be an active participant in this process and help your attorney, and his or her team. There are a number of companies today that will only work with you, for your protection. If your attorney shares that this is an issue, be sure to help and take the lead on getting your asset retitled.

5. Do make sure to ask for instructions. Be sure to participate in the process. Ask your estate planning attorney for instructions that you can use, on your own, should you open a new account or buy a piece of real property. Your attorney will be able to tell you how your new asset should be titled. You will also want to make sure he or she has this new information to add to your client file in the practice.

We know that this topic may raise more questions than it answers. Do not wait to contact us to schedule a meeting with a member of our legal team to discuss them. Trust funding is an important step that needs to be taken to reach your goals and we encourage you not to put off getting the information you need for yourself and your loved ones.

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We at Roth Elder Law, PLLC, believe in providing services in a way that clients can easily understand and meaningfully participate in designing and maintaining their estate plan for their loved ones, as well as be assured that their plan will be administered according to their wishes.