Creating a revocable living trust is a smart move in estate planning, designed to bypass probate and ensure your assets are distributed according to your wishes. However, many people overlook a crucial step: properly funding the trust. This oversight can lead to unexpected costs and complications, potentially undermining the very benefits you sought to achieve. Let's explore why funding your trust is so important and what steps you can take to protect your legacy.

The Pitfall of an Unfunded Trust

A common misconception is that simply creating a trust is enough. In reality, a trust may only avoid court involvement for assets that are actually titled in its name. Any assets left out may still be subject to probate – the very process you aimed to avoid.

The California Probate Threshold

In California, estates valued at $184,500 (as of 2024) or more must go through probate if not properly protected through title in trust, joint ownership, or proper beneficiary designations. This process can be both expensive and time-consuming:

• For a $500,000 estate, probate fees can exceed $26,000
• For a $1,000,000 estate, fees can surpass $46,000

Beyond these financial costs, probate can drag on for months or even years, delaying asset distribution to your beneficiaries. It's also a public process, potentially exposing your family's financial details to prying eyes.

Funding Your Trust: A Crucial Step

To reap the full benefits of your trust, you need to transfer ownership of certain assets to the trust itself. This process, known as "funding" the trust, typically includes:

1. Real estate
2. Bank accounts
3. Investment accounts
4. Other significant assets

However, not all assets should be titled in the trust's name. Some, like life insurance policies and retirement accounts, should have beneficiary designations set directly.

The Role of a Certification of Trust

When transferring assets, you'll often need to provide proof of your trust's existence without revealing its detailed terms. This is where a Certification of Trust comes in handy. This document outlines the trustee's authority and the proper title to your trust, and it simplifies the process of retitling assets.

Keeping Your Trust Up to Date

Estate planning isn't a one-and-done affair. Life changes, laws evolve, and your asset portfolio shifts over time. To ensure your trust remains effective:

1. Regularly review your assets and their titling
2. Update beneficiary designations as needed
3. Consult your living trust funding instructions provided by your attorney
4. Schedule periodic reviews with your estate planning attorney

These steps help identify any gaps or necessary changes in your trust funding strategy, ensuring your estate plan continues to meet your goals.

Safeguarding Your Legacy with Pederson Law Offices

At Pederson Law Offices, we understand the intricacies of trust funding and estate planning. Our team is dedicated to helping you navigate this complex landscape, ensuring your trust operates as intended and your legacy is protected.

Don't let an unfunded trust undermine your carefully laid plans. Schedule a consultation with us today to review your current trust funding strategy and receive personalized advice on maintaining and updating your trust.

Remember: A well-funded trust is the key to avoiding probate, minimizing costs, and ensuring your wishes are carried out smoothly and efficiently.

Please note: This blog post is for informational purposes only and does not constitute legal advice or create an attorney-client relationship. Consult with a qualified attorney at Pederson Law Offices for advice on your specific circumstances.