One of the most common misconceptions I hear from clients is that once they create a living trust, their estate planning is complete. While establishing a trust is an important step, it is only part of the process. As you acquire new assets over the years, it is important to consider whether those assets should also become part of your trust.

Failing to properly transfer new assets into your trust can create unnecessary complications for your loved ones and may even result in probate for property you intended to avoid probate altogether.

WHY FUNDING YOUR TRUST IS AN ONGOING PROCESS

Creating a trust and funding a trust are two separate steps. Funding a trust simply means transferring ownership of assets into the name of the trust.

Many people properly transfer their existing assets when the trust is first created but forget about assets they acquire later. Real estate purchases, new bank accounts, investment accounts, and other valuable property may remain outside the trust if they are never transferred.

WHAT TYPES OF ASSETS SHOULD YOU REVIEW?

Whenever you acquire significant property, you should determine whether it should be titled in the name of your trust.

Examples include:

• A new home or investment property
• Bank or brokerage accounts
• Valuable personal property
• Business interests
• Certain nonretirement investment assets

Not every asset belongs in a trust, so it is important to review each situation individually.

WHAT HAPPENS IF YOU FORGET?

Assets that remain outside your trust may not pass according to your trust's instructions. Depending on the type of asset and its value, your family may need to use the California probate process to transfer ownership after your death.

Even if you have a pour over will, probate may still be necessary before those assets can ultimately be transferred into your trust.

REVIEW YOUR TRUST AFTER MAJOR LIFE EVENTS

Buying a home is not the only reason to review your trust. Starting a business, receiving an inheritance, opening new financial accounts, or making significant investments are all good opportunities to ensure your estate plan remains up to date.

Making these reviews part of your regular financial planning can save your family considerable time and expense later.

WORK WITH YOUR PROFESSIONAL ADVISORS

The process of transferring assets into a trust varies depending on the type of property involved. Real estate, financial accounts, and business interests often require different documents and procedures.

Working with your estate planning attorney can help ensure new assets are properly titled and coordinated with the rest of your estate plan.

FINAL THOUGHTS

Creating a living trust is an important step, but it should not be viewed as a one time event. As your assets change throughout your lifetime, your trust should be reviewed to determine whether newly acquired property should be transferred into it.

If it has been several years since you reviewed your estate plan, or if you have recently acquired significant assets, now may be a good time to consult with an experienced California estate planning attorney to ensure your trust continues to accomplish your goals.

LEGAL DISCLAIMER

This article is intended for general informational purposes only. Any legal analysis or other content should not be construed as legal or professional advice or as a substitute for such advice. No attorney-client or confidential relationship is formed by the transmission of this information. If you require legal or professional advice, please contact an attorney or other suitable professional advisor. The choice of an attorney or other professional is an important decision and should not be based solely upon advertisements and blog postings.