You made the decision to establish a revocable living trust, decided on its terms, and signed the agreement. You’re all set, right?
Imagine that you went to the store, bought a piggy bank, took it home, and set it on your dresser. Is there any value in that piggy bank?
Unless you place coins into the piggy bank, it holds nothing of value. This logic is also true of the revocable living trust. The trust agreement itself establishes the trust and provides the terms for its administration, but until you take the steps to transfer your assets to the trust, your trust does not hold any assets. If you do not transfer your assets to your trust while you are living, then your assets are typically transferred to the trust after your passing through a probate estate administration, followed by a trust administration. One of the key benefits of a revocable trust plan is to avoid probate, but this is not accomplished when the trust is not properly funded.
The process of transferring assets to your trust is known as “funding.” The funding process entails signing a new deed to your residence(s), transferring your closely held business, and changing the beneficiary or ownership of your assets to name the trust as beneficiary or owner. Signing a trust agreement does not automatically transfer all of your assets to the trust.
It is important to review your assets, at least annually, to ensure your existing assets and any newly acquired assets are transferred to your revocable living trust. Is your trust fully funded?
Contact us to learn more at 303-741-4949.