You’ve executed your revocable trust – does that make you probate-proof? No. You still have to fund your trust. Funding your revocable trust (i.e., transferring your assets to your revocable trust) is the only way to ensure that you are probate proof. It is a good idea to review your assets each year to make sure there are not any assets out there that could potentially be subject to probate. Here are a few funding pointers: An individually owned real property should be deeded over to your revocable trust, or, alternatively, a beneficiary deed transferring the real property to your revocable trust upon your death should be executed.
Why executing the trust doesn’t make you probate-proof
You’ve executed your revocable trust – does that make you probate-proof? No. You still have to fund your trust. Funding your revocable trust (i.e., transferring your assets to your revocable trust) is the only way to ensure that you are probate proof.
- It is a good idea to review your assets each year to make sure there are not any assets out there that could potentially be subject to probate. Here are a few funding pointers:
- An individually owned real property should be deeded over to your revocable trust, or, alternatively, a beneficiary deed transferring the real property to your revocable trust upon your death should be executed.
- Real property owned by an entity (such as a corporation, partnership or limited liability company) can remain as is. However, make sure that the ownership interest in the entity is owned by your revocable trust.
- Mineral interests should be deeded over to your revocable trust, or, alternatively, to an entity owned by your revocable trust.
- Closely-held business interests (such as interests in corporations, partnerships and limited liability companies) should be assigned to your revocable trust. Keep in mind that certain consents may be necessary to effectuate such an ownership change.
- Personal checking accounts should either be retitled in the name of your revocable trust or made payable on death to your revocable trust. Money market accounts, savings accounts, certificates of deposit, and other less-frequently accessed accounts should be retitled in the name of your revocable trust.
- Brokerage accounts should be retitled in the name of your revocable trust.
- Discuss with your attorney what (if anything) should be done with respect to your retirement plans and life insurance policies. In some cases, individuals should be named as beneficiaries, while in other cases, your revocable trust, a sub-trust created under your revocable trust or even a separate irrevocable trust should be named as beneficiaries. Note that special language is required when incorporating a trust into a retirement plan or life insurance policy beneficiary designation in order to reap maximum tax benefits, so be sure to contact your estate planning attorney before incorporating a trust into your retirement planning.
For more information or if you have further questions about trust and estate planning, please contact one of our Trust & Estate Planning Attorneys. Click here for more about this practice group and a list of attorneys.
This news alert is created by the attorneys in Trust & Estate Planning Practice Group at Friday, Eldredge &Clark, LLP. The information provided is not a substitute for legal advice and should be considered for general guidance only. Please contact one of our attorneys for specific legal advice regarding this matter.