Make Sure Your Revocable Living Trust is Funded – The Glass v. SunTrust Case

Every time I speak with clients regarding setting up and establishing their estate plan including their Last Will and Testament, Disability Legal Documents, and Trust documents (whether they are revocable or irrevocable), I always tell my clients the same thing.

“We Can’t Stop Here Now That All Your Documents Are Complete. We Must Fund Your Trust With All of Your Property and Assets for this Trust to Work According to Your Wishes.”

You see, setting up and establishing your revocable living trust is just one of the first steps in order to make things simple for your surviving family, avoid unnecessary government intrusion, and protect your assets for your surviving family following your death. In order for the trust to work properly, you must fund your trust with all of your assets and your property.

This will include signing and executing new deeds transferring your real estate out of your name and into the name of the Trust that you created. It will also include transferring and retitling certain financial accounts and bank accounts into the name of your Trust. However, some people simply decide to use beneficiary designation on financial accounts and TOD (transfer-on-death) designations to allow their financial accounts to pass to their loved ones immediately after death. (A word of caution: Your loved ones will still be required to produce a death certificate to complete the transfer. A death certificate can take up to 6 weeks to obtain from the Department of Vital Statistics.)

However, another aspect that people fail to realize is that you need to ensure that your personal property is transferred into the name of your Trust. The recent Tennessee Appeals Court decision of Glass v. SunTrust touched on exactly this point. The facts of this case was centered on an allegation that SunTrust was negligent in the management of an individual’s estate. However, the first issue presented to the Appeals court was whether SunTrust was negligent in failing to ensure that all of the individual’s assets were transferred into the name of their trust. One specific quote in the case is very telling … “Although several witnesses at trial agreed that one reason for establishing a revocable trust can be to avoid probate, the record does not contain any evidence to suggest that this was Mrs. Glass’ intention … Mrs. Glass obviously knew how to convey assets to the trust when she desired to do so, yet she did not convey her individually owned assets to the trust during her lifetime or instruct anyone else to do so.”

The result of this was that there were certain assets owned by Mrs. Glass that were required to go through probate resulting in additional costs, expenses, attorney’s fees, and unnecessary government intrusion into her estate.

When creating a living trust (revocable or irrevocable) you need to make sure that the trust document precisely spells out your wishes and intentions when it comes to the creation of the trust. In addition, you need to make sure that all of your assets are funded into the trust so as to avoid probate, avoid additional attorney’s fees and expenses, and unnecessary government intrusion into your estate. Failure to do this will result in assets from your estate going through the probate court system and your estate not having a smooth and easy transition to your surviving family members.

If you have questions or concerns regarding the proper comprehensive estate plan to put in place for your family to ensure a smooth transition of your wealth to the next generation, then please contact our office for a complimentary visit and planning session so that we can discuss your estate planning needs in further details.

We look forward to hearing from you!

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