Get in the Car! (The Importance of Funding Your Revocable Living Trust)

This is for all those people who have started their estate planning (and anyone interested in what it means to have your assets in a trust).

You found the time, made the appointment with an experienced estate planning attorney, and created a Revocable Living Trust.

Your attorney talked to you about funding the trust, you listened intently, vowing you would do all the items on your action list, and fund your trust.  So, wait, what? That’s a long action list. You decided to take care of the bank accounts next week, and then call your financial advisor when you got back from your trip.  Next week came, and went, and you still haven’t funded your trust.

What does it really mean to “fund your trust?” Simply put, your assets are titled in your name, and when you fund your trust, they are retitled in the name of the trust.  The trust owns them, and you (or someone you select) are the trustee of the trust.

Why do you want your assets titled in a trust? Imagine you’re in a room, with everything you own. Cars, house, accounts, everything. If you die, and there’s no door out of that room, then your assets will have to go through probate in order to be transferred to someone else.  So doors out of the room are important. There are a few different types of doors; Joint tenancy, beneficiary designation, transfer on death and payable on death designations are all types of doors.  So is a revocable living trust. The revocable living trust, as a door out of the room, only works if funded.

It’s always easier for me to use analogies to communicate a concept, so I like to think of a trust like a car.  You have a shiny new car (your revocable living trust), your trustee is the driver, and the car will get you and your luggage where you want it to go, but you have to make sure you have it in the car.  Your bags (bank accounts, brokerage accounts, real estate,  and home) need to be in the car.  If you leave any of your bags on the curb, they will have to shipped on a truck and take a detour by the probate court before they can catch up with the rest of your assets. They will get there eventually, but it will take much more time and effort than if you had just put them in the car in the first place.  Moral of the story: get in the car.

Contributing Author: Amy L. Marble

Amy was raised in North Dakota. After graduating from Saint Louis University School of Law in 1996, she moved with her husband to his home state of Minnesota. Initially practicing in the field of Personal Injury law, Amy branched out to start her own practice in Estate Planning in 2003. In 2009, she stepped away from the practice of law to spend more time raising their family.