One of the most common misconceptions when it comes to estate planning is assuming that the planning ends once the estate plan is signed. While this may be true with a simple will (which still needs to be updated after major life changes), the same cannot be said revocable trusts. In order for a revocable trust to be adequately funded, a person must transfer all of their assets into the trust during their lifetime, or add a beneficiary designation to all accounts to transfer those funds into the trust automatically at death. Any assets owned by a person individually at death become probate assets, which require a probate filing with the court to transfer ownership.
In order to help you evaluate whether or not your trust is adequately funded, we’ve put together the following checklist:
1. Have you re-titled all assets into the name of your trust?
These items include: bank accounts, investment accounts, retirement accounts, insurance policies, real property, cars, etc. Every asset you own that has a title can be transferred into your trust. Make it a goal to annually review your asset portfolio, and make sure you haven’t forgotten to re-title any assets. (i.e. that vanguard account you set up with a previous employer that is still funded)
2. If your account has a beneficiary designation, is the trust listed as your first beneficiary?
Beneficiary designations can be helpful for certain tax deferred investment accounts that might otherwise cause you to incur a penalty for transferring assets. Make sure your trust is listed as the first beneficiary so that those funds are automatically transferred at death to your trust and distributed according to the terms of your trust.
3. Have you purchased any new property since signing your estate plan?
Any new property you acquire during your lifetime should be purchased by the trust to avoid having to re-title it in the name of the trust.
4. Remember you can call for help!
If at any point you need further assistance with transferring your property or re-titling your assets, we are here to help you. Please feel free to call or email us with any questions!