Nowadays, many people prefer a revocable living trust rather than a will in their estate plan. They appreciate the added control over assets that a living trust provides.
Nevertheless, many people make a huge error when setting up a revocable living trust that sends their estate straight into probate court they fail to fund their revocable living trust.
Funding a revocable living trust simply means transferring title to your assets from your name to the name of the trust.
The trustee you name will manage the assets in the trust. If you have named yourself as the trustee, you will retain complete control over the assets.
If you create a revocable living trust, but fail to transfer your assets to it, you will not avoid probate. Though your attorney will help, you (the grantor) are ultimately responsible for transferring all of your assets to the revocable living trust. A revocable living trust is typically used along with a “pour-over will”. When you pass away, the pour-over will captures any overlooked assets and transfers them to your revocable living trust.
Funding a revocable living trust is not complicated, but it can be time-consuming. However, since revocable living trusts are now so pervasive, you should meet with very little resistance when transferring your assets.
The general idea is that you should transfer all of your assets to your revocable living trust.
However, the assets you typically want in your trusts include:
You will also need to add your revocable living trust as the beneficiary of most of the assets you own for which a beneficiary can be designated. This way, those assets will automatically be transferred to the revocable living trust when you pass away.
In most circumstances, this will create no problems at all. In fact, you may be surprised how it is easy to transfer real estate you own to your trust and to buy new real estate in the name of the trust.
Furthermore, since the trust is revocable, transferring real estate to it should not affect your mortgage at all. Moreover, listing the revocable living trust as the owner on your homeowner's insurance, liability insurance, and title insurance policies may make it easier for a successor trustee to carry out business for you when necessary.
If you own property in a different state, transferring it to your revocable living trust will avoid probate in that state.
You don't need to transfer your car to your revocable living trust unless the car is worth a lot of money and significantly increases the value of your estate.
Other assets that probably shouldn't be transferred to your revocable living trust include:
If you are not sure if you should transfer an asset to your revocable living trust, consult with your attorney.
Personal property, such as art, clothes, jewelry, cameras, and other personal items normally don't have a formal title. So, your attorney will need to assist you in transferring these items into the trust.
First, determine if you can purchase the property in the name of your trust. If not, you can purchase the property in your own name, then immediately transfer the title to your trust.
A properly funded revocable living trust can allow your estate to avoid probate, saving your family the time and expense involved in the probate process. To learn more about funding a Colorado revocable living trust and to ensure that your trust is funded properly, consult with an experienced Colorado Estate planning attorney who can help. Call today to arrange a free consultation.
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