Chuhak Chats & Tecson Tips: Bryan Montana speaks on creating a trust and then what?

Bryan M. Montana, elder law attorney at Chuhak & Tecson, P.C., in recognition of National Elder Law Awareness Month, provides this important Tecson Tip.

• The typical lifecycle of a revocable living trust is as follows: 1. Create 2. Fund 3. Add New Assets 4. Review and Maintain 5. Administer. 
• However, far too many people stop after the first step, leading to wasted money and unnecessary hassle and expense for their loved ones. 
• This article will help you understand each step in the process, ensuring your trust actually works when you need it. 

A revocable living trust is an essential estate planning tool. Trusts help ensure your belongings do not get stuck in probate court when you die, reducing the time and expense related to settling your estate. They also help ensure that your wishes are clearly stated and followed. The most common mistake people make when they create a trust is overlooking the importance of properly funding their trust. The second most common mistake is assuming that the trust you create today is still going to work years or even decades from now when you finally pass away. This guide outlines the key steps necessary to avoid these mistakes and ensure you effectively manage your trust throughout your lifetime.

Step 1: Create and sign your trust

Creating a trust involves drafting and signing a legal document specifying who will inherit your assets, how and when they should have access to those assets and who will manage those assets in the interim. Trusts are typically kept private and do not get filed or recorded, ensuring privacy (another benefit of using a trust vs. a traditional last will and testament).

Step 2: Initial funding – Putting assets into your trust

Once your trust is set up, you need to transfer ownership of your assets (such as your home, bank accounts and investments) into the name of your trust. Alternatively, for some assets you can retain ownership in your individual name and simply name your trust as the “designated beneficiary” (aka “TOD” or “POD” beneficiary) of the asset or account. Failing to properly fund your trust can lead to probate (which your trust is designed to avoid), unnecessary taxes or worse.

Step 3: Adding new assets

Estate planning is an ongoing process. As you acquire new assets, like additional property, financial accounts or business interests, ensure they are also placed into the name of your trust. It is good practice to regularly review your balance sheet with your estate planning attorney and financial professionals to ensure proper funding and prevent future complications.

Step 4: Regularly review and update your trust

Periodically checking and updating your trust is very important. Life events such as marriage, divorce, birth of children or significant financial changes may require adjustments to your trust. Changes in the law may also necessitate updates to the terms of your trust. Your estate planning attorney can help advise you regarding how often your trust should be reviewed and whether any changes are needed.

Step 5: Administering the trust after your death

After you pass, the backup (successor) trustee you have chosen will manage and distribute your assets according to the terms of your trust  —usually with the assistance and guidance of an estate planning attorney. Proper maintenance of your trust simplifies this process and significantly reduces both stress and costs for your loved ones.

Conclusion

Creating, funding and routinely reviewing your revocable trust is vital to securing your family’s financial future.Your estate planning attorney can and should guide you through every step to ensure your estate plan works smoothly.