After an individual’s death, assets titled in the decedent’s (the deceased individual) name must go through probate (a process in which the court supervises the distribution of the deceased’s assets). By properly forming and “funding” your revocable trust, formal probate proceedings can potentially be avoided.
“Funding the trust” is the process of changing the title of one’s assets into the revocable living trust. Simply put, “changing the title” refers to the act of removing one’s name from the assets and placing them under the name of the trust. Typically, the majority of the funding activity is performed when the trust is created; however, it is important for trustees to remember to place newly acquired assets into the name of the trust.
In addition to the Declaration of Trust, an estate plan typically includes a “pour over will.” The pour over will acts as a safety net for all assets not transferred into the trust. Essentially, a pour over will names the revocable trust as the primary beneficiary of the decedent’s assets, thus transferring ownership to the trust. Although this safety net typically exists, trustees should not solely rely upon the pour over will as a means by which to transfer assets into their trust. Instead, trustees should properly fund their revocable trust and continue to properly title new assets to avoid any potential probate issues down the road.
If you have not funded your revocable trust, have questions about whether your trust is properly funded, or have questions about creating a revocable trust that fits the needs of your family, contact the knowledgeable estate planning attorneys at The Loftin Firm, P.C. today!