There are many benefits to creating a Revocable Living Trust as part of your estate plan, such as the ability to avoid probate and put a quick end to the estate administration process. However, creating a Revocable Living Trust will not automatically accomplish your goals.
Instead, after the trust is created, you’ll need to start the process of “funding” or moving assets into the trust. If this step is missed or an asset is overlooked– say you die without changing the title of your house into the name of your trust—it will need to go through probate, which negates all the planning you did in the first place.
The best way to avoid such mishaps is to talk to your attorney about which assets will be going into your trust so that you are clear on your funding responsibilities after you leave the office. The most common items your attorney may suggest including in your trust are:
Real estate is the most common type of property that’s put in a trust for the simple reason that when a trust is drafted, a quit-claim or transfer on death deed is often drafted at the same time by the estate planning lawyer to transfer the property to the trust. Real property makes up the bulk of a person’s estate, and having it in the trust can be the difference between going through a full probate process or dealing with a small estate administration.
Most solely owned bank accounts should be placed into a Revocable Living Trust, not only to avoid probate but also to allow for ease of access to your funds by your successor trustees if you should ever become incapacitated. However, joint accounts and accounts with beneficiaries do not need to go into a trust for the purpose of avoiding probate.
Trust attorneys generally advise against placing cars and other vehicles into Revocable Living Trusts due to liability concerns and issues that may arise with the Department of Motor Vehicles and auto insurance agencies. However, exceptions can be made if the automobile in question is an antique or a show car that will not be driven as a daily vehicle or if it is worth a considerable amount of money. When deciding how to title your automobiles, make sure you consult with your attorney and your insurance agent.
Small Business Interests
Transferring a small business interest into a Revocable Living Trust can be beneficial if you’d like someone to have the ability to immediately assume your business responsibilities after your passing. However, there may be complications depending on the type of small business structure you have an interest in. It is a good idea to review all the pros and cons with your lawyer before making a decision.
If you want to learn more about funding your Revocable Living Trust, or if you want to have your current estate plan reviewed to make sure your trust is properly funded and you are otherwise protected, please contact our office at 763-244-2949 to set up an appointment.