When you set up a revocable living trust, you must transfer your ownership rights over certain assets to your trust, or more specifically, your trust’s designated trustee. Only then may it reach its full potential by avoiding probate and other estate planning benefits. However, this ownership transfer cannot be accomplished simply by instructing for such in your trust document. Rather, you may need to work with each asset accordingly. With that being said, please continue reading to learn the most common trust funding mistakes and how an experienced Putnam County trusts attorney at the Law Office of Andres D. Gil, PLLC, can work hard to ensure you do not fall for any of these traps.
What are the most common mistakes a grantor makes when funding a trust?
You may assume that writing “[asset name] goes to my trust,” in your estate plan transfers ownership, but it does not. Nonetheless, below are the most common mistakes a grantor makes when attempting to fund their trust with different assets:
- A grantor may fail to retitle their real estate property with a new deed.
- A grantor may fail to retitle a bank account with a financial institution’s specific forms.
- A grantor may fail to get approval from business partners before transferring their business interests.
- A grantor may fail to create a written assignment for personal belongings like jewelry, art, household goods, etc.
Even if a grantor handles these different procedures properly, they may be erroneous by listing the trust name incorrectly on a deed, bank form, financial paperwork, personal property memorandum, etc. Or, they may wrongly assume that assets of a similar nature, like a vacation home or second vehicle, automatically flow into a trust fund once the primary one is properly transferred.
What mistakes can a grantor make with retirement accounts and their trust fund?
Since retirement accounts are managed by their respective financial institutions, they do not undergo probate with the New York State Surrogate’s Court. While your revocable living trust has a similar effect, you may guess a straightforward approach would be to retitle your retirement accounts to your trust’s or trustee’s name.
However, you may find this to be a grave mistake if you do not like the idea of triggering serious tax implications. Of note, a better alternative may be to designate your trust as the retirement account beneficiary. Again, this may require you to undergo a special procedure with the financial institution, rather than simply stating this in your trust document.
You should not let the pressure of creating a valid and enforceable estate plan rest solely on your shoulders. Please allow a skilled estate planning attorney in Putnam County, from the Law Office of Andres D. Gil, PLLC, to assist you throughout this process. We look forward to helping you set up your trust and then guiding you in funding it. Give us a call today.
