The Importance of Properly Titling Trust Assets

Creating a new living trust is an important tool in providing for minor children or beneficiaries with special needs, and in avoiding the costs and delays of a formal probate proceeding.  In the best-case scenario the court does not need to get involved. However, far too often the court does need to get involved, when clients have created the trust structure but not properly funded the trust with assets of their estate. This court involvement includes having to probate the assets that were not properly titled. Thus, the simple act of not having assets titled in the trust can defeat one of the main benefits of having a trust, avoiding probate.

Creating the trust is only step one of the process.  There is another critical step to make sure all of your assets are properly in the new trust, putting assets in the name of the trust. Not everyone properly titles assets and that can create unnecessary problem in the future.  In my office, we include assisting with correctly titling the assets in the cost of preparing the trust.

Upon the death of the creators of the trust, not having assets properly titled into a trust, especially real property and financial accounts, can cause unnecessary expenses to the estate and delay distribution to beneficiaries.  Depending on the type of asset(s) and value of the asset(s) determines what tools are available to put the assets into the trust.   Beneficiary designations for IRAs and other tax deferred accounts are also important to check.

In order to avoid court involvement with probate proceedings, the value of assets NOT in the trust has to be less than $166,250.  Other states have lower limits. 

This court involvement can easily add thousands of dollars of expenses to administering the trust, because of probate fees. Additionally, final distribution of assets that are involved in any court proceeding cannot be distributed until the court proceeding is final, which often takes more than a year.

If you have a trust you should review your financial accounts and real property deeds to make sure that they are properly titled. If you have an existing trust and are not sure about whether your assets are properly in the trust,  we will review your trust and assets with you without cost to determine if they are properly titled.