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Living trusts must be funded for full operational effect

| Jul 11, 2018 | Trusts |

Trusts are often a key element in one’s estate plan in California and elsewhere. After reviewing one’s financial situation with an experienced estate planning attorney, a plan will be agreed on that may include testamentary and/or living trusts. The creation of a revocable living trust may be a central focus of the estate plan.

However, some people make the mistake of not funding the trust, which results in a wasted effort and basically the defeat of the intended estate plan. Funding, therefore, is an absolute essential to making the trust operative. The attorney will start that process by making up a new deed for all real estate that is earmarked for the trust. In most instances, the deed simply transfers title from the owner back to himself or herself as trustee for the trust.

Deeds must be recorded in the county courthouse to give full operational functionality. The attorney may also provide an assignment or bill of sale bringing one’s personal belongings, furnishings and collectibles into the trust. With respect to other accounts, there may be some footwork or additional time to put in for transfer of existing assets into the trust. For example, it will be necessary to go into the bank with the trust papers and instruct it to transfer one’s accounts into the trust.

A similar procedure is taken with respect to stocks, investment accounts, bonds and the like.  Brokerage and investment advisors have forms and procedures to properly bring about the transition. Regarding any assets that are not readily transferable into trusts, seek guidance from the estate attorney for information on the appropriate procedure. To assure full compliance with California and federal law, it is recommended that a close working relationship with the attorney be established and maintained going forward.

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