How to Help Your Loved Ones (and Assets) Avoid Probate

Gabriel Katzner - August 10, 2020 - Asset Protection
San Diego Asset Protection Lawyer
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Instead of a will or joint ownership, many people today are replacing those common estate planning tools with a revocable living trust. A revocable living trust avoids the public, costly and time-consuming court processes of conservatorship or guardianship (which may be necessary if you become incapacitated) as well as probate (the court process that takes place after death). But to make a revocable living trust work for you, you’ll need to take one critical step which too many users often neglect: you’ll need to fund the trust.

 

Funding your Trust

 

Funding a trust simply means transferring accounts and property from your name into your trust. In some cases, you may also want to name your trust as a beneficiary. If you have any accounts or property that hasn’t been properly funded into your trust, we can help you transfer these thereby keeping them out of the probate process.

 

Funding is accomplished in several different ways. You can: 

 

  • Change the title of the asset from your individual name (or joint names if you’re married) to the name of your trust, for example, from John Smith to John Smith, Trustee of the John Smith Living Trust dated June 1, 2020.
  • Assigning ownership of an asset without a title (such as artwork, jewelry, collectibles or antiques) to your trust.
  • Changing the beneficiary of the asset to your trust.

 

What if Assets are Left out of the Trust?

 

For many people, avoiding probate is the primary reason to set up a revocable living trust. But simply singing your trust agreement doesn’t complete the process. If you fail to change titles and beneficiary designations before becoming mentally incompetent or dying, your accounts and property (and your loved ones) will end up in probate court.

 

Which Assets Should, and Which Should Not, Be Funded Into Your Trust?

 

Consider funding the following assets into your trust:

 

  • Real estate – homes, rental properties, vacant land, and timeshares
  • Bank and credit union accounts – checking, savings, CDs
  • Safe deposit boxes
  • Investment accounts – brokerage, agency, custody
  • Notes payable to you
  • Life insurance – if you don’t have an irrevocable life insurance trust
  • Business interests
  • Intellectual property
  • Oil and gas interests
  • Water rights or shares (especially in some states where they can be quite valuable)
  • Artwork, jewelry, collectibles, and antiques

 

You should probably NOT fund the following assets into your trust:

 

  • IRAs and other tax-deferred retirement accounts – only the beneficiary should be changed
  • Incentive stock options and Section 1244 stock
  • Interests in professional corporations
  • Foreign assets – in some countries, funding an asset into a U.S.-based trust causes adverse tax consequences, while in other countries, trusts aren’t recognized or are ignored due to forced heirship laws
  • UTMA and UGMA accounts – your minor grandchild is the owner, you are merely the custodian; instead, name a successor custodian
  • Cars, trucks boats, motorcycles and scooters –most states allow vehicles to pass outside of probate; in others, a beneficiary can be designated for vehicles; and in still others, vehicles don’t have to go through probate at all.

 

We can help you determine what should go into your trust and what should stay outside of it. Also, before purchasing new assets, find out how we can help you title the account or deed or who to designate as the beneficiary.

 

Why Should You Fund Your Trust? 

 

Funding your trust helps you gain the best results from your trust-based estate plan.

 

  • Instead of a conservatorship or guardianship judge being in charge of things post your incapacity, your chosen successor trustee will take control of your trust assets if you become incapacitated, ensuring that you are cared for in the manner you expect.
  • Your trustee, instead of a probate court, will take control of your trust assets after your death, managing and distributing the contents to your beneficiaries without court involvement.
  • Your trust will be easier to update as your wishes and circumstances change.
  • Your final wishes will remain a private family matter instead of being publicized in the local probate court records / newspaper publishing requirements.

 

Trust Funding Guidance

 

Many people like the cost and time savings, as well as the added control over their money, that a revocable living trust can offer. But an unfunded trust has little to no value. Consult with us, by phone or video conference if you prefer, and we can answer questions about funding your trust. We look forward to working with you on all of your estate planning needs.

 

You can use the link below to schedule a call with Gabriel Katzner, or just call us at 855.528.9637 to learn more about how best to plan today to protect those most important to you




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