Thursday, October 21, 2010

Fully Funding Your Living Trust to Avoid Probate

I often meet with people who wish to avoid probate. Probate is a public court proceeding required to transfer a person's assets at death. Probate can be lengthy and expensive. All assets owned in individual name (or jointly without survivorship) can only transfer to your loved ones through probate. Ways to avoid probate include survivorship rights, beneficiary designation and use of a trust. Assets owned jointly with right of survivorship automatically transfer to the survivor at death, but the asset will eventually end up in probate at the survivor’s death. Assets such as life insurance are transferred by their beneficiary designation form, but even these can end up in probate if there is a problem with the designation.

I often help my clients to establish a living trust to avoid probate. Of all of the ways to transfer assets, a living trust offers the most flexibility and control. Yet merely creating a trust will not avoid probate. A trust only avoids probate for those assets properly titled to it. Only a fully funded trust can completely avoid probate.

If you have a living trust, I strongly urge you review its funding. Particularly, make sure your safe deposit box is titled to your trust. Please remember when opening new accounts or purchasing new assets to put them in your trust. If you have any questions, please contact me.

Patrick

No comments: