Many clients believe that setting up a revocable living trust is all they need to do to avoid probate. This is only partially true. To completely avoid probate the trust must also be “funded”.
Funded involves the transfer of assets from the client’s individual name into the name of the trust. For example, if Bob and Jane Doe own a home a new deed must be filed showing that the real estate is now owned by Bob and Jane Doe, Trustees of the Doe Living Trust. For investments, CDs or bank accounts, ownership of the account must also be changed to reflect the Doe Living Trust is the owner. For retirement accounts or life insurance policies, the beneficiary (either primary or contingent) should be changed to reflect the trust. Taking the time to transfer assets into the trust may seem like a lot of paperwork, but taking the time and paying attention to detail will ultimately will keep your assets from going through probate and allow your trust to control the distribution. Even the most well-drafted trust is not complete if the assets you own have not been transferred into the trust. If you have not reviewed your trust or how your accounts are set up, now is the time to make sure these items are in order.