Maintaining Your Living Trust

When properly prepared, a living trust avoids costly court processes. However, many people make a major mistake when they do not properly maintain their trust.

If you don’t maintain your car, it will break down and fail to perform.  Like a car, if you fail to maintain your trust, it will not achieve the desired purpose when needed.

Many people choose a revocable living trust instead of relying on a will or joint ownership in their estate plan. They like the cost and time savings, plus the added control over assets that a living trust can provide. When properly prepared, a living trust avoids the public and often costly court processes at death (probate) and incapacity (conservatorship or guardianship). It can let you provide for your spouse without disinheriting your children, which can be important in second marriages. It can save estate taxes. And it can protect inheritances for children and grandchildren from the courts, creditors, spouses, and irresponsible spending. However, many people make a major mistake in that they do not properly maintain their trust by keeping it properly funded.

Funding your trust is the process of transferring your assets from you to your trust. To do this, you physically change the titles of your assets from your individual name (or joint names, if married) to the trustee of your trust. You also will change beneficiary (or contingent beneficiary) designations to your trustee.

The trustee you name for your living trust controls the assets in your trust. Most likely, you have named yourself as trustee, so you will still have complete control. Remember, one of the great features of a revocable living trust is that you can continue to buy and sell assets just as you do now. You can also remove assets from your living trust should you ever decide to do so.

If you have signed your living trust document but haven’t changed titles and beneficiary designations, your trust will likely not achieve the desired results. You may have a great trust, but until you fund it (transfer your assets to it), it doesn’t control anything. Your revocable trust can only control the assets you put into it. If the goal of your living trust is to avoid probate at death and court intervention at incapacity, then you must fund it now, while you are able to do so.

If you have a trust, your attorney should have prepared a “pour over will” that acts as a safety net. When you die, the will “catches” your assets and “sends” them into your trust. If you have forgotten to transfer an asset or two into your trust, the asset will probably have to go through probate first, but then it can be distributed according to the instructions in the will, to your trust.

You are the one ultimately responsible for maintaining your trust. Most attorneys will transfer real estate into the trust, and will provide forms and instructions for your other assets. Often they will include sample letters or blank forms for you to use. The funding process is not difficult. Because revocable living trusts are now so widely used, you should meet with little or no resistance when transferring your assets into your trust.

Like maintenance on a car, funding your trust and keeping your assets properly titled in the trust brings peace of mind because you know, that just like a well tuned car, your trust will perform properly when needed


11 thoughts on “Maintaining Your Living Trust”

  1. I have recently started a blog, the information you offer on this site has helped me greatly. Thanks for all of your time & work.

  2. Wow! This is particular. One of the most beneficial blogs I have ever arrived at. I am a specialist so I understand your hard work.

  3. Mari Hendrick Wistrup

    I blog quite often and I truly thank you for your content. Your article has really peaked my interest. I am going to book mark your website and keep checking for new details about once per week. I opted in for your Feed too.

  4. I was wondering if you ever thought of changing the page layout of your blog? Its very well written; I love what youve got to say. But maybe you could a little more in the way of content so people could connect with it better. Youve got an awful lot of text for only having 1 or 2 pictures. Maybe you could space it out better?

    1. Meredeth, thank you for visiting our site and for your wonderful feedback. We would be happy to consider your feedback in our future article releases; thank you for taking the time to help us improve. Cheers.

Leave a Comment

Your email address will not be published.