Newman Law Group

Trust preparation includes funding the trust

For many people, preparing for the future means making an estate plan. Instead of a will, some people choose to use a trust as a way to protect assets for heirs. One common trust preparation mistake is forgetting to transfer the title of assets into it. A trust is like a storage tote -- it only protects your valuables if you put them in it. California residents looking to offer the most benefit to their successors may find this reminder quite useful. 

In a revocable living trust, an individual and his or her spouse will transfer the title of all assets into it and serve as co-trustees. This won't change the trustee's ability to control the assets, but it will help the assets avoid probate in the event of the death of the trustee. After the trustee's death, the successor trustee can step in and begin to manage the assets. A successor trustee can also take charge if the original trustee becomes incapacitated. 

Unfortunately, if an individual neglects to fund the trust, the benefits of the vehicle will be lost. The hard work of setting up a trust includes the transfer of deeds and titles. For many financial accounts, an individual may just have to fill out the proper forms. It can also be helpful to bring the successor trustees into the picture to establish a relationship with the companies and institutions they will have to deal with later on. 

Transferring assets into the trust is a vital part of trust preparation. Once it is set up, the vehicle will be ready to protect your wealth in your lifetime and beyond. California residents looking to go through the legal process of starting a revocable living trust may wish to do so with the assistance of a lawyer. 

Source: Forbes, "7 Big Estate Planning Mistakes - Not Making Full Use Of A Living Trust", Bob Carlson, Feb. 28, 2018

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