LIVING TRUST FUNDING

This Article is designed to be of general interest. The specific techniques and information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.

The basic building block in estate planning is a Living Trust. And once it's done, what next?

The Trust must be funded: assets must be re-titled in the name of the Trust.

Another approach (which I hate) is the Trust Schedule (of assets).  The theory behind the Trust Schedule approach is that the client will change accounts and investments over the years and make notation on the Trust attachment to reflect proper ownersjhip.

The drawback is that saying an asset is in the Trust does not work if the holder of the asset does not cooperate.

For example, if XYZ Bank account with $200,000 is listed on the Trust Schedule as being in the Trust, but XYZ Bank says Mom owned it in her name alone, not in Trust according to their records, there will be trouble.  And Probate Court Orders will be needed.

My approach to avoid trouble when possible is to have the account titled in the name of the Trust at the bank.  You know this is done when statements all reflect the name of the Trust.  Then the Bank will be helpful later when a new Trustee takes over, or when the kids inherit.

See ANNUAL UPDATE