Creating a trust as part of your estate plan could have many benefits. But those benefits can be completely missed if you don’t title your assets properly and they don’t end up in the trust! A crucial aspect of trust planning that cannot be overlooked is funding your trust.
Establishing a trust can have a variety of benefits. They may include avoiding probate, protecting assets, providing for a beneficiary with special needs, minimizing estate tax, or protecting an inheritance. However, while it is critical to include the right language in the trust document to achieve your objectives, it is equally critical to make sure the right assets end up in the trust.
We are currently assisting a lovely client through an estate administration process that could have been avoided. Her deceased mother had created a trust (with another law firm) but never followed through with properly funding her trust As a result, when our client sought our help to “administer the trust,” we found that upon review of the mother’s assets, there was nothing actually held in the trust.
If the trust had been properly funded, and the assets outside the trust had all been designated with named beneficiaries, the entire estate would have been readily available for distribution to the appropriate parties. Instead, our client did not have immediate access to her mother’s assets and had to petition the Surrogates Court to be appointed as the Estate Administrator, in order to collect and distribute the assets.
This court administration process caused legal expense and delay that could have been avoided. Additionally, by going through the court-supervised estate administration, the assets were now exposed to potential claims from creditors. If the mother had been receiving Medicaid benefits, the estate assets could have also been subject to Medicaid estate recovery, further reducing the inheritance for the intended beneficiaries. All of these issues could have been prevented if the mother’s trust had been properly funded during her lifetime.
A critical part of the estate planning process is not only creating the documents, but reviewing each asset and updating either the ownership or beneficiary designations to make sure the process is as smooth and economical as possible after lifetime.
Contact us to review your estate plan and ensure the smooth administration of your estate. We are happy to help you with this process.
