Many of our estate planning clients have chosen to use a Revocable Living Trust as a way to avoid probate of their estate as much as possible when they pass on. Unfortunately, just having the documents set up is not enough to avoid probate. The process of “trust funding,” meaning retitling assets or changing beneficiaries to make sure they work in conjunction with the trust and overall plan, has to be an ongoing process. As assets change, the new assets have to also be titled properly and/or have the correct beneficiaries.
In order to make sure the trusts are and remain properly funded, our office takes several steps. In some cases, our clients are already working with experienced financial advisors trained in trust planning when we put together their legal documents, and those advisors are taking the lead in making sure those trusts are properly funded. In those cases, please contact your financial advisor about the status of your accounts. In cases when there isn’t a financial advisor who has been specifically trained in trusts and therefore not taking the lead in trust funding (which is most of our cases), our office takes several steps to make sure that our clients know and understand proper trust funding on an ongoing basis so they can properly fund their own trust:
This program is probably the best way to ensure that the investment our clients have already made in a revocable trust plan will continue to be effective over the years. By having their annual meeting, changes and updates, and current trust funding recommendations included in their Peace of Mind Plan, it is much more likely that their plan will be current. (For more information on the Peace of Mind Plan, please contact our Client Services Director Felicia Watlington at 919-844-7993).
Unfortunately, despite all of our efforts, some of our clients do not follow up and reject our annual offers to meet. After a passing this can lead to some extremely unhappy trustees and beneficiaries when more than a minimal amount of assets has to go through probate. (Vehicles, some refund checks, and a few odds and ends are common, but if there is a properly funded trust then the large accounts, real estate, and other “big” assets are avoiding the probate process.) Our office wants to make sure that our clients’ plans remain as effective as possible over the years after the initial plan was set up, but we can only do so much. We can’t force our clients to meet with us.
For more information on the importance of trust funding, please take advantage of a free download in the chapter on trust funding from my book Estate Planning Basics available here on Amazon. (Since 2012, Estate Planning Basics, a previous version of the book, or another book of Mr. Marsocci’s has included the same or similar chapter and is required reading before their initial Estate Strategy Session with our office.)
To stress the importance of ongoing work to make sure that trusts are fully funded, our office will be sending out this article as part of our newsletter every six months. If any of our clients wish to have an Annual Meeting, then we do encourage them to contact our office to schedule one so we can review these items in detail. If you have questions about whether or not an account is set up to work in conjunction with your revocable living trust, then we recommend your contact the financial professional working with that account. If you do not have a regular financial advisor, then please let us know and we would be happy to provide a recommendation. You can reach our office at 919-844-7993 with any questions you may have.