Did you know that a trust is a vehicle into which you place assets to be managed by a selected trustee for the benefit of the trust’s beneficiaries? There can be two essential elements to a trust. First, there is the trust itself, which is created through a legal document that identifies the purpose of the trust, the trustee of the trust and his or her powers, the beneficiaries of the trust, and the requirements for distributing the trust assets to the beneficiaries. The second element of the trust is the “corpus” of the trust, or, in other words, the sum of money or property placed into the trust. Not all trusts, however, may be properly set up and end up failing.
The primary reason why many trusts fail may surprise you. It may not be the failure to properly establish the trust in the legal document, as you may think. Most trusts may actually fail due to inadequate funding. Believe it or not, many people go through the process of hiring an attorney to set up the trust, but neglect to follow through on all the necessary next steps that must be taken to fund the trust after the trust is created.
In order to obtain the benefits associated with utilizing a trust in your estate planning, including avoiding probate and simplifying the administration of your estate, you may need to ensure that all of your assets are funneled into the trust. This can include retitling your current assets in the name of the trust and remembering to add any after-acquired assets to the trust in the future. If you fail to do so and some assets are left outside the trust, then your estate will likely need to be probated and your objective of avoiding probate through the use of the trust will not be satisfied.
To help ensure that the trust that you are creating to meet your estate planning goals will actually satisfy those goals and will not fail, you should work with an experienced estate planning attorney, who will not only help you establish your trust, but will help you understand how to properly fund your trust so that you avoid this common pitfall. Our office is available to assist. Please feel free to contact us to schedule an appointment.