A revocable living trust is one of the most important tools in estate planning for avoiding probate. However, many people overlook the importance of properly funding the trust and, by so doing, may still end up in probate court if they do not fund their trust. Like spending the time and effort to buy and install a safe in your closet, it doesn’t do any good if you don’t put things into the safe..jpg)
What Does Funding a Trust Mean?
Simply, funding a trust is the process of transferring assets—be it real estate, bank accounts, beneficiary designations, stocks, or other valuable property—into the trust. While this might seem simple, it is often overlooked and can lead to many costly problems.
Why is it important to fund a trust?
1. Avoiding Probate
One of the key advantages of a revocable living trust is that it generally avoids probate court. It is essential that you “fund” your trust so that this goal is accomplished. Probate is costly, time-consuming, and can cause unnecessary stress and burden on your loved ones. Properly funding your trust creates a seamless transition for your loved ones to inherit your estate assets without the unnecessary probate process.
2. Maintain Control
Another advantage of a trust, especially a revocable living trust, is the amount of Control you have over how the estate assets are distributed. However, this Control is lost without proper funding, and your estate might need to be administered through probate court. Another advantage of a revocable living trust is its ability to provide for your care during a period of incapacity. Our wills and trusts lawyer details the advantages of revocable living trust for incapacity planning in the linked blog post.
3. Putting Everything Under One Roof to Avoid Legal Issues and Privacy Concerns
If your assets are left outside your trust, they can be more easily contested and litigated in court. These disputes can be costly and stressful for your loved ones. By properly titling assets into your trust, you ensure that they are covered under your “trust umbrella” and sheltered from the storms that can exist outside of your trust. Additionally, anything left outside your trust will be subject to the public display of the Probate process, where generally, everything filed is a matter of public record. Without proper funding, you may lose this key privacy benefit revocable living trusts provide.
An Unfunded Trust is a Safe with Nothing in It
Without proper funding, a trust is ineffective in achieving its key benefits over a will-based estate plan. Consult with an experienced estate planning lawyer today to ensure your trust is properly funded and that you take advantage of the benefits of a revocable living trust-based estate plan.
