Estate Planning

Have a Trust? Will it Work at Death?

Everyone knows that Trusts are part of estate planning. Most people go to their attorney after the documents are prepared and “execute,” the trust and other documents, including the durable power of attorney, the health care power of attorney, and a pour-over will. After that, they are done, right?

A trust only controls the assets titled in its name. You must transfer ownership over to the trust, otherwise known as “funding the trust.” When someone passes away and it is discovered that the trust was still unfunded problems can arise. Assets held in joint tenancy are passed to the surviving joint tenant, normally the spouse. Other assets can pass by beneficiary designation, such as bank accounts, retirement accounts, etc. Any assets in the deceased spouse’s name have to go through probate, the public, expensive, and sometimes difficult process that title is passed from a person who has died, through intestacy if there is no will, or in someone with a trust’s case, through their pour-over will to the trust.

Initial Funding of Your Trust:

As part of your estate plan, a Wilson & Haubert, PLLC assists in the initial funding of your trust. We will ask for a list of the assets you and your spouse currently own and assist you in titling these assets in the trust’s name. Ownership of most assets should be transferred into your trust.

Exceptions are:

Retirement accounts, such as IRAs, 401(k)s, 403(b)s, etc. Doing so would have negative income tax consequences. In some circumstances you may want to change the beneficiary designation of these accounts to your trust.

Life insurance: However, sometimes it is advisable to put this in a special irrevocable trust in order to reduce estate taxes.

If an asset should not be titled in trust’s name, we will assist you in getting the appropriate payable on death “POD” designations on those accounts.

Future Funding of Your Trust:

Moreover, we provide wallet-sized trust funding cards that include all the relevant information to title new assets in your trust’s name. When you purchase something you want the trust to control, e.g. a new car, you can hand the appropriate person this card to make sure the new asset is titled correctly in the trust’s name.

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