Your Estate Planning Toolbox: Trusts

The Last Will and Testament and other forms of the Will were covered in our most recent Wynn at Law, LLC, article. Often going alongside a Will is one or more trusts. A revocable living trust is the tool in the Estate Planning Toolbox for holding and distributing a person’s assets to avoid probate. In its simplest definition, the Trust is an entity separate from you that allows you pass assets anyone designated in the trust.

First, a word about
probate. Probate is a court process that oversees the administion
and distribution of the assets of a deceased person. As part of the
process, the court system validates a person’s Last Will and
Testament, if they have one. While the probate process is not
“scary,” it can eat up a lot of time and money. That is all the
more reason to turn to an experienced Estate Planning attorney for
help in how to avoid that unnecessary cost and delay.

A Trust skips the
probate process

How does a Trust skip
the probate process? A Trust is an entity separate from you that
holds your assets while your alive and sets forth how you want your
assets handled after your passing. Since a Trust is a separate entity
from personally, when you pass away your Trust continues. Since a
Trust cannot “pass away” anything titled in the name of the Trust
would not be subject to the probate process. Properly titling assets
in the name of a Trust, often referred to as “funding,” avoids
probate on those assets. This is why an experienced attorney will
talk you through the process of retitling assets into your Trust.

Listing assets,
changing titles

After the Trust is set
up, the Trust ‘owns’ the property. A Trust is only worth the assets
that are titled into it. This is the step that trips up many who
don’t use an attorney for the trust. For many things – jewelry or
collections as examples – the trust simply lists the assets in
detail. Real estate is a bit different in that the deed or title (see
related article) has to be changed to list the trust as the actual
owner of the property. This isn’t complicated. Still, when this step
is overlooked, your assets could end up in probate.

Avoid double
counting and under counting

Your retirement plans
and insurance policies already have beneficiaries. This money doesn’t
end up in probate, but the assets also don’t flow into a trust,
unless you’ve set the trust as the beneficiary. That tactic can seem
confusing, but it points out the importance of looking at
beneficiaries of things like life insurance and IRAs at the same time
as the trust is created. You might have even forgotten who you listed
as the beneficiary over the years since opening the IRA or policy.

In the last article, we covered the Pourover Will. The pourover helps you take care of assets you may have overlooked by sweeping them into a trust. In our next article, we’re going to cover Powers of Attorney that will help you take care of yourself.
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