Probate can be quite a complex process. It involves a lot of time and effort and can be emotionally taxing, particularly for families already dealing with the loss of a loved one.
Many individuals opt to incorporate living trusts into their estate planning strategy to circumvent the probate process and streamline the transfer of assets.
But it’s not quite that simple. To fully realize the benefits of a living trust, you will need to fund it properly. Let’s look at how to fund a living trust after probate.
LIVING TRUSTS: WHAT ARE THEY?
A living trust can be a valuable tool to create an estate plan. In legal terms, it is an entity into which you can transfer ownership of your assets during your lifetime. The person who creates the trust is known as the grantor or trustor and is typically named as the initial trustee so they can retain control over their assets. A grantor will usually also designate a successor trustee, who manages their trust in case they ever become incapacitated or pass away.
The biggest advantage of a living trust is that it lets you avoid probate as to the assets it contains. Probate distributes a deceased person’s assets according to their will under the supervision of the court. The process is timely, costly, and public, which can be stressful for the family involved.
On the other hand, a properly funded living trust lets you transfer assets to beneficiaries more efficiently and privately.
HOW TO FUND A TRUST
To ensure you fully reap the benefits of a living trust, you need to fund it properly. In this context, ‘funding’ refers to the transfer of ownership of your assets from your name to the name of your trust. Here’s a step-by-step guide on how to accomplish this:
CREATE A COMPREHENSIVE INVENTORY
Start by creating a detailed inventory of all your assets. This should encompass your real estate properties, bank and investment accounts, retirement funds, life insurance policies and plans, personal possessions, health savings accounts, and other significant assets.
Thoroughly document everything, as this inventory will serve as your roadmap for the funding process.
IDENTIFY ASSETS THAT SHOULD BE FUNDED
Not all your assets need to be transferred into the living trust. Some assets come with their beneficiary designations, such as life insurance policies and retirement funds, and these don’t require inclusion in your living trust.
Similarly, assets with joint ownership or designated beneficiaries need not be part of the trust. Once you’ve listed all your assets, carefully decide which ones should be funded into the living trust. It’s advisable to consult a Denver probate lawyer for expert guidance in this regard.
TRANSFER REAL ESTATE
To move real estate into a living trust, you’ll need to change the title from your personal name to that of the trust. For assets that have a deed or title, this typically involves creating a new document that identifies the trust as the new owner. Once completed, this document should be filed with the appropriate government agency.
RE-TITLE FINANCIAL ACCOUNTS
You’d have to re-title assets like banks, investments, and brokerage accounts in the name of the trust. This is usually done through the financial institution. When you contact them, you can provide a copy of the trust agreement and complete their paperwork to carry out the process.
UPDATE BENEFICIARY DESIGNATIONS
Scan through the beneficiary designations on assets like retirement accounts, life insurance policies, and any bank accounts. Ensure they align with your living trust’s beneficiaries or the stipulated trust provisions.
TRANSFER PERSONAL PROPERTY
Move assets like vehicles, jewelry, artwork, and other tangible items into the trust. Depending on state laws, this might be accomplished using a bill of sale or updating ownership documents.
GET PROFESSIONAL APPRAISALS
For high-value assets such as art collections or antique furnishings, consider having them professionally appraised before incorporating them into the trust. This aids in determining a fair market value, essential for tax purposes and equitable distribution among beneficiaries.
MONITOR CHANGES IN ASSETS
Once your living trust is set up and funded, monitor any new assets you acquire to ensure they’re integrated into the trust. Regularly review and adjust the trust to accommodate these additions. Also, routinely update beneficiary designations as needed.
For example, you want to stay on top of incorporating new assets into the trust and make necessary changes to beneficiary designations.
Maintain Detailed Records
Keep comprehensive records of all transfers, modifications, and updates related to your living trust. Having this organized documentation will simplify the process for your successor trustee and beneficiaries when the time comes to administer the trust.
THE BENEFITS OF PROPER FUNDING
Properly funding your living trust after probate keeps your assets protected and distributed according to your wishes while avoiding the costs and delays associated with probate. Here are some benefits of funding a living trust.
PRIVACY
Unlike probate, which is a public process, the details of a living trust remain private. Your financial situation, real estate, taxes, and the allocation of your assets are private.
COST SAVINGS
Probate can be costly, reducing the value of your estate due to court costs, attorney fees, and executor fees. You save money on these expenses if you avoid probate.
TIMELY ASSET DISTRIBUTION
A living trust allows for the quicker distribution of assets to beneficiaries than the traditional probate process, which can take months or even years.
FLEXIBILITY
Living trusts allow you to manage your assets while you are alive and guarantee they are dispersed following your precise wishes. A Denver estate planning attorney can help you with this process.
THE ROLE OF AN ESTATE PLANNING ATTORNEY
A legacy planning attorney is pivotal in assisting individuals and families in crafting comprehensive estate plans. These plans not only manage their assets during their lifetime but also ensure efficient distribution upon their passing. Here’s a closer look at what a legacy planning attorney does:
Assessing Individual Needs:
Legacy planning attorneys immerse themselves in understanding their clients’ distinct financial, familial, and personal situations. Through in-depth conversations, they identify key priorities like charitable donations, asset protection, or specific provisions for unique family needs. The result is a tailored estate plan, as unique as the individual it represents.
Creating Legal Documents:
The bedrock of any estate plan is its legal documentation. Legacy planning attorneys are skilled in preparing vital documents such as wills, living trusts, healthcare directives, and powers of attorney. Each document serves a purpose, whether it’s asset management, health decisions, or financial delegation. They ensure these documents reflect the client’s wishes and are legally robust.
Minimizing Taxes:
Adept at navigating tax laws, legacy planning attorneys craft strategies to reduce estate and gift tax liabilities. Their expertise allows them to utilize tax exemptions, deductions, and credits effectively, ensuring beneficiaries receive the maximum possible inheritance.
Asset Protection:
Protecting a client’s wealth from potential threats like creditors or lawsuits is paramount. Legacy planning attorneys employ legal instruments, such as trusts, to shield assets. By crafting sound asset protection plans, they guarantee that the intended recipients inherit the assets without any external interference.
Avoiding Probate:
One of the key roles of a legacy planning attorney is to help clients avoid the probate process or streamline it when it’s necessary. This may involve creating living trusts, which allow assets to be transferred privately and efficiently to beneficiaries without going through probate.
By establishing living trusts and properly funding them, attorneys ensure that the client’s assets can smoothly transition to heirs without the delays, costs, and public scrutiny associated with probate. This approach grants peace of mind to clients and their families during challenging times.
Appointment of Fiduciaries:
Legacy planning attorneys help clients select and appoint fiduciaries, such as executors, trustees, and agents for powers of attorney. These individuals are entrusted with managing and distributing assets and making financial or healthcare decisions on behalf of the client when they can’t do so themselves.
Attorneys guide clients in choosing responsible and capable fiduciaries who will carry out their duties effectively, maintaining the client’s best interests and the well-being of beneficiaries.
Planning for Incapacity:
These attorneys help draft documents such as durable powers of attorney and advance healthcare directives. These tools dictate who will make financial and medical decisions if the client becomes incapacitated, ensuring choices align with the client’s wishes.
These documents ensure that the client’s healthcare preferences and financial affairs are managed according to their wishes and are not subject to potentially contentious decisions made in the absence of clear instructions.
Family Dynamics:
Given the complexities of family relationships, legacy planning attorneys design estate plans that minimize disputes among beneficiaries. This might involve equitable asset distribution or nominating a neutral third party to oversee trust or estate execution, ensuring harmony and smooth plan execution.
Legal Compliance:
Every estate plan must abide by state and federal laws. Legacy planning attorneys ensure plans are in line with the legal requirements of the client’s residing state, minimizing potential legal complications during the execution phase.
Periodic Review and Updates:
Encourage clients to regularly review and update their estate plans to reflect changes in their life circumstances, such as marriages, divorces, births, deaths, or changes in financial status. Legacy planning attorneys stress the importance of keeping estate plans current to account for life changes and evolving goals.
They also assure that the plan remains effective and relevant over time.
Counsel and Education:
Provide guidance and educate clients on various aspects of legacy planning, helping them make informed decisions about the management and distribution of their assets. Attorneys serve as educators, ensuring clients have a clear understanding of the options available to them and their potential impact.
They empower clients to make well-informed decisions aligned with their goals.
Documentation and Record Keeping:
Help clients maintain accurate and organized records of their legacy planning documents and the funding of trusts to facilitate efficient administration when the time comes. Such attorneys emphasize the importance of maintaining meticulous records.
They ensure that documents are easily accessible and that the trust is funded properly and transparently, simplifying the distribution process for beneficiaries.
BOURASSA LAW GROUP PROVIDES LEGAL COUNSEL FOR FUNDING LIVING TRUSTS
Working with an experienced legacy planning attorney or tax advisor is highly recommended during funding. They can provide valuable guidance, ensure you understand the legal implications of asset transfers, and help you complete the necessary paperwork correctly.
Contact the Bourassa Law Group today to schedule a consultation with our dedicated estate planning lawyers in Colorado. We are here to guide you through the intricacies of the living trust process, offer expert legal advice, and get your trust funded properly.
Don’t face the probate journey alone—let us be your partners in securing your future. Reach out to us at (800)870-8910. Your peace of mind is our priority.
1-800-870-8910