In our experience many people who take the steps to put an estate plan in place neglect

the all important final step – funding the living trust. This refers to the process of changing ownership of your property from your personal name to the name of the living trust.

Personal Residence and other Real Estate

For example, most people own their home in their personal names:

John and Mary Smith, husband and wife

To enjoy the benefits of the living trust, title of the home must be transferred to the living trust so that the new owner of the home looks like this:

The Smith Family Trust Dated January 1, 2019, John and Mary Smith, Trustees

For real property like a personal residence, a vacation home or a rental property this is accomplished with a transfer deed (we recommend a warranty deed). The transfer deed must be properly executed and recorded with the local municipality, usually the county in which you reside.

Once the transfer deed is properly recorded, the legal owner of the home or other property is your living trust. You and your heirs will now enjoy the benefits of your trust for your real property such as avoiding probate and allowing your trustee to sell your property without involving the court.

Bank and Investment Accounts

In our experience it is actually fairly common that the law firm that prepares the living trust documents will follow through and prepare and file the transfer deed for the personal residence. Where the ball usually gets dropped is on other – non real estate – assets.

Since your attorney doesn’t typically have access to your bank and investment accounts, it is usually up to you to follow through. You need to meet with your banker and investment advisor and change the owner of these accounts from your personal name to the name of your living trust.

That said, at estateplanningUS we believe that the attorney has a responsibility to regularly follow up with you and provide you with the support you need until all your accounts are re-titled in the name of your living trust. We provide that support for every client who purchases a living trust package.

Life Insurance

For an estate that falls below the $5.1million per individual estate tax exemption, it is typically desirable to make the living trust the beneficiary of your life insurance. While a life insurance payout occurs outside of probate court for an adult, this is not the case for minor children.

A conservatorship must be opened with the court for a minor that is a beneficiary of a life insurance policy until the child turns 18. Then, the child is entitled to ALL of their share of the life insurance benefit in one lump sum. This is typically not a desirable result.

Likewise, if your spouse is incapacitated at the time of your death, a conservatorship may need to be opened to manage the life insurance proceeds for the surviving spouse. Again, this is less than ideal.

By making your living trust the beneficiary of your life insurance in place of your spouse and children, you can avoid court involvement. You can determine in the trust at what ages your children will receive their share of your life insurance money and the trustee will manage the life insurance proceeds for the benefit of an incapacitated surviving spouse.

All of this can be accomplished with a simple change of beneficiary form provided by your life insurance company.

Business Interests

It is also very common that business interests fail to get assigned to the trust. This can create significant issues on death when it comes to dividing up business interests among your heirs and establishing who has authority over your business.

For example, many of our clients own an interest in a limited liability company (LLC) that owns real estate – either as a partnership with others or as their solely owned LLC. This LLC interest should typically be assigned to your living trust in order to avoid probate and provide your trustee with authority to deal with the LLC and its properties after you are gone.

Likewise, if you own stock in either a public or closely held company those shares need to be assigned to the living trust to enjoy the benefits and protections of the trust. If the stock is in your name at the time of your death instead of the trust’s name, your heirs may find themselves in court in order to obtain ownership of and divide up the shares of stock.

We Can help!

Depending on your situation and the nature of your property, funding your trust may be quick and simple or it may require some real time and effort. Either way, it must be done.

At estateplanningUS we are here to help you push your estate plan across the finish line by helping you to fully fund your living trust. Our Concierge Legal Services Membership plan provides the support you need to get your living trust funded. We include a one year membership with all of our living trust packages.

Click here to get started on your living trust!