The Importance of Funding Your Revocable Trust
The trust you think you have:
You would like to believe your estate planning objectives have been achieved. Ideally, your assets would be fully integrated with your trust. You would also like to know you’ve done your part to successfully avoid the probate process. Finally, You would have confirmation that your assets will flow exactly as you would like to your loved ones.
The trust you actually have:
It may have been intended to perform exactly as described above; however, in most situations no action has been taken to ensure that one’s financial assets and legal planning are coordinated to achieve the intended result. Unanticipated expense and delay may burden your family because assets were not properly funded to your trust or you may discover you have beneficiary designations which are outdated or inappropriate. Instead of reducing the work and conflict your successor trustees will face, as you had intended, you may actually have created a costly scenario in which your trustees are required to untangle a mixture of asset ownership with conflicting parties.
The trust You would like to have:
Your trust would work exactly as you hoped, with assets flowing to your loved ones in a secure and protected manner. Your trust would be fully funded and easy to manage for your successor trustees, and would provide you with the peace of mind of knowing you have done everything you can to take care of your loved ones. The Law Offices of Robert J. Longchamps, PLLC can help you attain the trust you would like to have, no matter where or when your trust was drafted.
How Can a Trust Fail?
A trust may fail due to poor design, inconsistent premises, or a lack of execution, or maintenance. However, the most frequent cause of trust failure is inadequate or incomplete funding of the trust. Integrating your assets with your trust is a specific, important process which is not often accomplished properly. Frequently, trusts are left unfunded, despite the fact that an unfunded trust cannot function as well as a funded trust. Additionally, an unfunded or under-funded trust will lead to a process you had intended to avoid – the probate of your assets, which can be costly and time consuming.
What does it mean to “fund” a trust?
Funding a trust is a process of re-titling certain assets to the trust, and changing beneficiary designations on selected assets to ensure they will be paid directly to the trust upon the passing of the asset owner. Think of your trust as a bucket. If your assets are not properly funded, your bucket is empty. Empty buckets will not accomplish all of the goals you had in mind when your trust was originally drafted and signed.
What will the proper funding of your trust accomplish?
- Assurance that your assets pass to your loved ones without the delay and cost of the probate process;
- Protection against creditors and predators for your beneficiaries (if your trust has been designed to provide asset protection to the beneficiaries); and
- Verification that your assets are titled correctly and that the beneficiaries of those assets are exactly as your trust specifies.
What can you do if you have an unfunded or under funded trust?
If you have executed a revocable living trust but have assets which are currently outside of the trust, it’s time to take action. The Law Offices of Robert J. Longchamps, PLLC has an entire department dedicated to the funding of trusts. Our attorneys and asset integration specialists are available to review your assets and to work with you and your financial advisors to ensure that your bank accounts, investment accounts, life insurance policies, corporate or other business interests, real property and any other assets are fully and properly funded to your trust.