Today I want to talk about the most important thing you need to do when setting up your Living Trust...Funding it. Funding is just another way of saying that you are putting your assets into the trust. This need not be a confusing process. I get questions from people about how a living trust actually protects assets from Probate. The answer couldn’t be more simple. You need to change the vesting or ownership of your assets to the name of the Living Trust. That’s what “putting your assets into the trust” means. Any assets left outside (not funded into) the trust are subject to Probate if their combined value is greater than the Probate levels set by your respective state. In California where I live that level is about $20,000 worth of real estate or $100,000 in personal property. Each state has its own regulations and the Heritage website makes it easy for you to reference them by listing each states limits. So, anyone with total assets less than those limits will not have a Probate issue to deal with. They may have to fill out a form but there will be no Probate involvement or delays or costs.

If you do not fund your assets into your Living Trust you leave them open to Probate and your Trust is nothing more than an expensive Will. Funding takes a little time and effort...but it only has to be done once. Any new assets you acquire should be titled in the name of your Living Trust to be sure they are protected.

There are two types of assets I want to talk about here. There are titled assets and untitled assets. Titled assets are titled in the public record. For example, a home is titled with a recorded deed, a car is registered with the DMV, a stock or bond is titled with the broker, and so forth. If it’s recorded or registered in any form in the public record, it is a titled asset and that ownership title must be changed from your name to the name of your Living Trust. Once you do that with each titled asset it is protected from Probate. A Living Trust titling looks something like this:

The John and Mary Doe Family Trust
John and Mary Doe, Trustees
Dated: October 8, 2009

Untitled assets are usually referred to as your “Personal Property” and they are things like your cash, jewelry, antiques, collections, furniture, or anything you have that doesn’t have to be registered or titled in the public domain. This type of asset is easily funded into your living trust by writing a description of them into your trust in the Asset Inventory section. It’s an inventory of things you “intend” to have in the trust. “Intent”, is an important legal determiner. If you have more than $100,000 worth of personal property, (depending on your state) and you have not written them into your Trust, they may become subject to Probate. This inventory of personal property is also valuable to you for insurance purposes if a house fire or natural disaster destroys your home. Needless to say you should store your trust in a fire-proof safe.

So, you can see that there is a little work to do, but it’s an easy project and just takes a little leg-work. The greatest risk is that people often dread launching into such a project so they procrastinate on funding their trust only to find that their neglect causes the family to deal with Probate later. The best way is to make a project out of it and keep that living trust out where you can see it until you finish funding it. Then and only then should you put the Trust away in a safe place. Be sure your successor trustee knows where you put it because they will need it when you die.

The Heritage Living Trust comes with complete instructions on how to fund the trust and details each and every type of asset with the procedure for putting it into the trust. It involves no more than following simple instructions. In most cases a Living Trust can be fully funded in 30 days or less...even taking it at a casual pace. It's the most important thing you do with your trust and the primary reason you set up the trust in the first place. Don’t neglect this very very important step.

If you have questions regarding this topic, feel free to email me or post a question on this blog and I will be glad to respond.

Until Next Time...