Funding a Revocable Living Trust and Choosing a Qualified Trustee
“Funding” a Revocable Living Trust is the process by which assets are transferred to the trust. It involves taking assets titled in the grantor’s name (or joint names if the grantor is married) and retitling them to the name of the trust. Funding can also involve taking assets that require a beneficiary designation and naming the trust as the primary beneficiary.
So, why is it important to fund your Revocable Living Trust? If your Revocable Living Trust is “unfunded,” it will not be able to provide you with all of the trust’s potential benefits. These benefits include avoiding probate, lifetime disability planning, and asset protection for future generations.
While an unfunded Revocable Living Trust will still provide asset protection, it will not allow your estate to avoid probate or offer enhanced disability planning. In essence, an unfunded Revocable Living Trust acts in the same way as what is called a Testamentary Trust, which you can procure for less than the cost of a Revocable Living Trust.
Bottom line: If you want to take full advantage of a Revocable Living Trust’s potential, make sure it is properly funded.
Choosing the Right Trustee
A trustee can be one person, multiple people, or what is called a “corporate trustee,” such as a bank or trust company staffed by people who manage and grow trust assets. It is essential to choose the right trustee because this person or institution is responsible for carrying out your wishes and protecting trust assets.
Many grantors name a spouse, an adult child, a relative, or a close personal friend as trustee. The person you choose must have the ability to serve in this capacity and the willingness to devote all of the time and energy necessary to carry out the mandates of the trust. It is important to note that the trustee must administer the trust faithfully and accurately. He or she can be held legally and financially responsible for any mistakes, even those that are unintentional. This is why you should think long and hard about your choice of trustee. Do not take this important decision lightly.
Attorneys Who Understand Living Trusts
Revocable living trusts can be a very effective estate-planning tool that help you avoid the expenses and hassles of probate. While many people use living trusts to avoid probate, living trusts can be complicated to make. When properly prepared, a living trust helps you avoid the costly and time-consuming court processes at probate. However, your assets can get sent right into the court system if you don’t fund your trust. Anyone with complex estate planning needs should consider hiring an attorney to prepare their living trust.
The Estate Planning attorneys with The Law Offices of Clifford M. Cohen can work with you to ensure your living trust meets all of your needs and wishes. Through our years of experience in estate planning, we create genuine relationships with every concerned individual who welcomes our services to ensure that their best interests and loved ones are protected. Allow us to do the same for you. Contact us today at 202-895-2799 for a free case evaluation.