One of the biggest reasons that living trusts fail is because people do not "fund" their living trust. That means, you have to actually change "title" to all the assets that are going to be governed by your living trust. If an asset is not titled in the name of your trust, then the asset is not governed by the trust. It's that simple. There is no "half pregnant" - either something is in your trust and therefore governed by it, or it's not.
There are three major benefits to funding your living trust:
First, all the assets that are titled in your living trust will avoid the court system. Basically, the courts don't have to get involved if you've taken care of things in advance by setting up a living trust.
Second, all of the assets in the name of your trust can be handled by your successor trustees in the event you can no longer handle your own affairs.
Third, all assets titled in the name of your living trust will be governed by the terms of your trust. What does it mean to be "titled in the name of your trust?" That simply means that you have to take the time to change the title on the asset. Therefore, a bank account would no longer be solely in your name. The bank account instead would reflect the name of your trust. You have to physically go to the bank and take care of that. When you get statements in the mail, you will see the name of your living trust instead of your name alone. This goes for single people and married couples.
Also, all of your real estate needs to be in the name of your trust. Therefore, you actually have to physically execute a brand-new deed transferring the title from your name alone to the name of your living trust. As you can see, there is paperwork involved when transferring assets into the trust. There are other assets that need to be transferred to your trust as well. The bad news is it takes time to do so, but the good news is that once you've taken care of it, you can rest easy for the most part until you acquire a new asset.
Once again, failure to find a living trust is one of the biggest reasons that living trusts fail. What good is a trust if you don't put anything in it? If you have any questions about this topic or other estate planning related topics, please feel free to call my office and arrange for an appointment.
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