Creating a Trust is Only Part of the Process. Just Creating the Paperwork Doesn’t Do the Job.

Trust Funding

After having created a Trust, the next thing that needs to be done is to fund the Trust. This is done in a variety of ways, depending on the asset.  In the case of real estate, the property needs to be deeded to the trustee(s) of the trust and the deed recorded.   In the case of bank accounts and brokerage accounts best practice is to have these accounts be set up as trust  accounts.  If accounts have a beneficiary, we need to analyze whether the assets are to go into the trust or directly to the beneficiaries.

The goal is to arrange the assets so that it is not necessary for the successor trustee or executor of a will to go to court to get assets distributed.

If the trust is not funded, so that assets remain in the decedent’s name upon death, or if some assets are overlooked, then the successor trustee must go to court to get the assets distributed.

In general not every asset makes it into the Trust. This is for a variety of reasons, such as forgetting about an asset when initially funding the Trust or acquiring at asset after the Trust has been made but not properly titling it. This is why our firm always includes a Pour-Over Will in estate planning packages that include a Trust.   It is a fail safe in case assets are not properly in the trust.

A Pour-Over Will is like any other Will except that the beneficiary of the Will is your Trust. This allows assets that weren’t in the Trust at death to be brought under the Trust’s control. The catch is that in order for a Pour-Over Will to bring assets into the Trust, a probate proceeding needs to occur.  This takes time and money.

The executor of the will (usually also the trustee of the trust) has to get the court to order that the properties go to the trust, then the trustee can proceed with administration of the trust.

You can avoid this with some planning.  Remember that creating the trust is only the first step.  Equally important is making sure to fund the trust.