Living Trusts can be great tools for people who wish to protect property for their heirs, delay distribution of assets to heirs, or simply avoid the costly process of probate. Unfortunately, some people draft Living Trusts and then do not properly fund them before their death, meaning the estate must undergo probate.
Fortunately, there is still time for you to learn about how to properly fund your Living Trust.
What is meant by ‘funding’ my Living Trust?
The funding of your Living Trust involves transferring your assets from your personal name to the name of the Trust. For example, you may rename accounts from simply John Smith to Living Trust for John Smith, or some variation depending upon the financial institution executing your Trust documents. This is generally not a complicated process, as you can typically call your mortgage lender or bank, fill out a transfer of ownership form, and submit that form. However, for more complicated assets such as a business, you should consult with an attorney to oversee the transfer of ownership process.
Why would I wait to fund my Living Trust?
In some cases, if you are young or want to leave out certain assets from your Trust, you may not want to fund them. In fact, you may not want to fund your Living Trust at all during your lifetime. If you plan on moving soon, for instance, then there is no need to transfer your home to your Living Trust.
One instance that should be included in your Living Trust is out-of-state real property. By including this in your Trust, you may avoid probate proceedings out of state.
Remember to reserve personal checking accounts and other such accounts from your Trust. You want to leave a certain amount of monthly cash flow to be accessible from a checking account so that you can make frequent purchases without signing in the name of the Trust at retail stores.
What you include and exclude from your Living Trust is completely up to you. Consult with an estate planning attorney for specific advice for your individual situation.
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
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