Business Succession, Estate Planning, Probate, Real Estate, Trusts, Wealth, Will Contests, Wills

The #1 Most Frequent Mistake in Estate Planning: The Underfunded Trust

One of the biggest mistakes I see in estate planning is an underfunded trust.

What is an underfunded trust you might be asking me through your screen.

Well, an underfunded trust is a trust that does not have all of your assets in it.

More specifically, you have to understand that a trust is a legal entity once you sign the document. Kind of like creating a family company.

But, if you create a company, you still have to transfer assets into it to start running the company.

The same can be said of a trust: you need to make sure that all of your assets are either in the trust, or the assets have a beneficiary designation that will eventually put the asset into the trust.

More specifically, you want to make sure that your house is retitled with a new deed that puts the house inside the trust.

You want to make sure your insurance policies, retirement and investment accounts have the correct beneficiary designations.

And, you’ll need to double check your checking and savings accounts have a transfer on death designation on them to get everything into your trust once you pass away.

Additionally, just to make your life that much harder, you need to use specific language when creating these deeds and beneficiary designations.

My advice? Talk to your attorney about funding your trust. Make sure you are using the right language.

And, if you’d really like, you should work with a financial planner to make sure that you are doing everything correctly.