Trust funding is a crucial part of estate planning that many people forget to do. If done properly with the help of an experienced estate planning attorney, trust funding will avoid probate, provide for you in the event of your incapacity and save on estate taxes, says Forbes’ recent article entitled “Don’t Overlook Your Trust Funding.”
If you have a revocable trust, you have control over the trust and can modify it during your lifetime. You can also fund the trust while you’re alive. This will save your family time and aggravation after your death.
You can also protect yourself and your family, if you become incapacitated. Your revocable trust likely provides for you and your family during your lifetime. You are able to manage your assets yourself, while you are alive and in good health. However, who will manage the assets in your place, if your health declines or if you are incapacitated?
If you go ahead and fund the trust now, your successor trustee will be able to manage the assets for you and your family if you’re not able. However, if a successor trustee doesn’t have access to the assets to manage on your behalf, a conservator may need to be appointed by the court to oversee your assets, which can be expensive and time consuming.
If you’re married, you may have created a trust that has terms for estate tax savings. These provisions will often defer estate taxes until the death of the second spouse, by providing income to the surviving spouse and access to principal during her lifetime. The ultimate beneficiaries are your children.
You’ll need to fund your trust to make certain that these estate tax provisions work properly.
Any asset transfer will need to be consistent with your estate plan. Ask an experienced estate planning attorney about transferring taxable brokerage accounts, bank accounts and real estate to the trust.
You may also want to think about transferring tangible items to the trust and a closely held business interests, like stock in a family business or an interest in a limited liability company (LLC).
One of the main goals of our law practice is to help families like your plan for safe, problem free, and successful transfer of assets to the next generation. Call our office today to schedule a time for us to review your estate plan and identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
Reference: Forbes (July 13, 2020) “Don’t Overlook Your Trust Funding”