Have You Completed Your Estate Plan? Are You Sure? Have You Retitled All of Your Assets and Completed the Proper Beneficiary Designation Forms?

When we speak with individuals and families for the first time, whether it is at one of our free monthly seminars, or whether it is during a complimentary legal consultation at our office, we hear the statement that “we set all this up about 10 or 11 years ago.” However, when someone says that they set all this up about 10 years ago and already have a trust, many families are surprised to hear when we then ask, “did you complete your beneficiary designation forms where all of your accounts are located and did you transfer all of your assets into the name of your trust?” 

Although, it is completely true that a trust, when structured appropriately, can accomplish nearly every estate planning objective that you may have for your family. However, if the trust is not funded properly before your death, your estate planning legal objectives may not be fulfilled. For example, a common estate planning strategy is to set up a revocable living trust for the purpose of avoiding probate costs and delays for your loved ones when you are gone. However, in order to properly avoid probate with a revocable living trust, the trust will also need to be funded and your assets transferred out of your name and into the name of the trust. If, for some reason, your home was not transferred out of your name and into the name of this trust, then this would be an asset that would have to go through the probate court process in order to transfer this asset to your loved ones and family members. In this type of situation, all of your assets would not go through probate, and the purpose of establishing your revocable living trust would not have been accomplished. 

Therefore, it is important to thoroughly understand that just because you establish a revocable living trust, your legal affairs still may not be in order. In order to meet your objective of avoiding probate, the trust needs to be funded with all of your probate assets as well, defined as those assets that would go through probate if these assets were titled in your own name. However, please note the distinction that non-probate assets do not need to be retitled into the name of the trust. This would include such items as life insurance, 401(k) accounts, and annuities (assets where you are able to name and designate a beneficiary on the account).

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