Even if you have a trust, it might not work when you need it the most. I’m Sarah Siedentopf. I’m an estate-planning attorney in Atlanta, Georgia.
The biggest problem with trusts is that people forget to actually put things in them. This is called funding a trust. So if there are not assets in the trust, the trust doesn’t manage the assets. Often we see trusts that suggest in the paperwork that something has been transferred into the trust, businesses. We might be transferring stock. We might be assigning LLCs. All of this stuff requires a paper trail, and it’s not enough to just say, “All of my stuff is in my trust,” just sort of generally in the trust.
Even your personal properties, so your jewelry, your furniture, all of those things, should get an assignment of personal assets that specifically memorializes that these things have been transferred into the trust. Unless there is actual paperwork, be that a deed on file in land records, account paperwork at the bank, be it an actual transfer into the trust or a payable-on-death beneficiary set up for the trust, unless you have those things in place, your trust isn’t funded, or perhaps it’s partially funded.
We’ve got some things in the trust. Sometimes this is on purpose, partial funding because we have a plan for the other assets that doesn’t involve putting it into the trust. But it is incredibly important to understand that when you sign the trust, there are steps that have to be taken later. And as part of that process, you can’t take these steps before you’ve signed the trust. It feels like we’ve completed something.
Oh wait, I just received a checklist? There are more things I have to do? I have to check my beneficiary designations and update them. Maybe I need to make the trust a payable-on-death beneficiary of a bank account. So all of these things have to be considered.
Each plan is potentially different in terms of where things should go. But if you have a trust that doesn’t have anything in it, you have a trust that isn’t helping you. I’ve had people come to me with trusts, and they say, you know, “We wanna change this trust. You know, what can we do?” And one of my first questions is always, “What is in the trust?” Do we even need to change it? We could just write a new one and put your assets into the new one and not worry about whether you’re allowed to change the old one if there’s nothing in it. And of course, if someone passes away, it’s then too late to set those things up if they haven’t already been set up.
So funding the trust is of vital importance. It often gets overlooked. If wanting to create a trust and make sure it is properly funded is on your to-do list, please give us a call. Thanks.
N/a