If you become too ill to speak for yourself, advance directives can tell what kind…
Estate planning trusts can be one of the more valuable options available to administer an individual’s financial affairs during a disability or at their death. Clients have often found that a living trust is superior to other methods. Most individuals understand that a trust involves the creation of a document (similar to expressing one’s wishes through a will), but few understand that the document creation is but the first phase, and one important step remains. The “trust-making” process is not complete until the trust is funded with assets, thereby giving the trust a “corpus” or value.
There are many methods to “owning” property. Assets can be owned individually, jointly or even by an entity, such as a trust or business. Assuming you have created an estate planning trust, it is essential that the real estate is placed in trust ownership to avoid expensive, time-consuming administration of your real estate if you do not. The process involves preparation of a deed and recording it with the Recorder of the County in which the real estate is located. If you are working with an attorney, he or she can handle this process easily for you.
“Funding” your trust is the process of transferring your individual assets into your trust by changing the owner. Assets that can be transferred into trust may include real estate, vehicles, bank accounts, IRAs, 401ks, other investment accounts and life insurance. The funding step is so critical to avoid the need to have your assets “probated” by a court to legally transfer them after your death. An attorney will provide guidance on which assets to transfer into your trust and how to do so. If you do forget to transfer an asset into your trust, even most estate plans that have a trust at its center will also include a “pour-over will” in order to give direction for distribution.
After you have established an estate planning trust, keep in mind that you continue to direct ownership of your assets into your trust. For instance, if you buy a new home, you are generally advised to take “title” or ownership in the name of your estate planning trust. It is important to note that if you ever refinance your home, your mortgage company may require you to transfer the property out of trust to complete the lending process. After your home is refinanced, you would then want to transfer it back to your trust’s name. The effort to properly title your home will pay dividends for the simplicity that comes with trust administration of your estate, including your home.
If you or someone you know is considering the creation of an Estate Plan, contact our office for high quality representation throughout the entire process.