Many estate plans include a living trust, a tool that can be amended at any time during the trust creator’s life and becomes irrevocable upon their death. Even the most carefully planned and detailed estate plans could be at least partially ineffective if the trust creator fails to fund the trust.
Funding a living trust is not highly complicated, but not always a fast process. The timeliness of funding a trust is dependent on several factors. Mainly, the type of assets the grantor wishes to hold in trust. Real property and other titled assets will need to be re-titled in the name of the trust. Documents assigning tangible personal property into the trust might need to be completed as well. An estate planning lawyer can advise if certain property should be excluded from the trust. (Learn about handling special items like art, wine, classic cars, and other collectibles in your estate.)
Beneficiary designations might also need to be updated if the individual wishes to include those respective assets in trust. Financial accounts, life insurance, and other assets should be inventoried and addressed to make sure accurate beneficiary forms are on file and reflect the trust.
Since it takes time to complete the proper paperwork, and ensure documents are completed and filed appropriately, funding a trust should not be pursued with haste. At the same time, the process should not be forgotten. Trust creators should understand it is not the responsibility of the attorney to fund the trust unless the attorney was specifically engaged for that purpose. Funding the trust is typically the responsibility of the client.
When a person forgets to fund a trust, in the event they pass away, most assets not in the trust will be part of the probate estate. As part of a living trust plan, estate planning lawyers also prepare a “pour over” Will that directs that any assets not in trust when the testator dies be transferred to the trust.. This will not prevent these assets from passing through probate, but the trust provisions will then control how and to whom the asset will be transferred.
Probate in North Carolina, and most states, is an often lengthy legal process that requires strict procedures and makes details regarding a decedent’s assets part of the public record. Assets that pass through probate could be tied up in the process for several months or longer. Court costs and attorneys’ fees are an additional burden. Take the time to fund your trust properly and prevent problems for your family later on.