Setting up a living trust is an important tool to provide a smooth and cost-effective transfer of assets to your heirs when you pass. However, creating a trust is just the first step. The next crucial step in the process is funding the trust. “Funding the trust” refers to the process of transferring title to your property from you to your trust. The most common mistake that people make is not titling newly purchased real estate in the name of their trust. Failing to do this can frustrate the whole reason you put a trust together in the first place.
A trust only controls assets that are titled in the name of the trust. If you mistakenly fail to title property in the name of the trust, then that item of property is treated as if you had no trust at all. Depending on the value of the property, your beneficiaries might have to go through the costly and time-consuming probate process to successfully obtain title to the property. This can be especially troublesome with real estate, as the deeds to your real estate not only need to be titled in the name of the trust, they also must be properly recorded with the county recorder’s office. Furthermore, there is a chance that the property could pass on to an unintended beneficiary if the intestate laws (the laws dictating which heirs shall inherit based on family relation when there is no trust or will) provide for a different distribution than you intended.
Pour over wills allow for transfer of assets into your trust when you pass away. However, having to resort to a pour over will is certainly not ideal, as wills must still be approved by the probate court before they are given any effect. Thus, your heirs would still incur costly probate expenses as well as a significant delay. The bottom line is that there is no substitute for ensuring that your assets are titled appropriately in the name of your trust.
If you have any questions about our estate planning services, Max Alavi, Attorney at Law, APC is here to help. Give us a call today at 949-706-1919 or contact us at firstname.lastname@example.org.
The purpose of this article is to provide a general overview of estate planning and probate and is not specific legal advice. By viewing this blog, you understand that no attorney client relationship is being formed. If you are dealing with a potential probate or estate planning matter, it is highly recommended that you contact an attorney. http://www.octrustslawyer.com/