Utilize a Financial Advisor When Funding Your Living Trust

Matthew HarrisonPartner, Harrison Law, PLLC

As mentioned in previous articles, if you want to spare your loved ones the headaches of the probate court process after your death, you may wish to consider creating and funding an Arizona Living Trust. A Living Trust can spare key assets of an estate from inclusion in the probate process. However, a living trust only succeeds in this goal if it’s organized correctly and then funded properly with the assets that are part of the estate. This article will take a closer look at what you should know about funding a Living Trust and the importance of utilizing the advice and counsel of your financial planner or other similar advisor.

In basic terms. a Living Trust is a structure designed to assume legal ownership, either immediately or at the time of your death, of the assets you assign to it. While you’re alive, you’re the trustee and responsible for the maintenance of the trust, but you will have named a successor to take over this responsibility upon your death. This successor will then oversee the organization, protection, and distribution of your assets according to your stated wishes.

One of the primary advantages of a Living Trust is its ability to avoid the probate court system. Assets placed in a living trust are exempt from the probate court process, but this transfer doesn’t automatically occur simply because you created the trust. Once the living trust has been created, it still must be funded in order to be fully effective. If this step hasn’t been properly completed at the time of your death, your estate will probably trigger the probate cycle, trust or no trust – rendering useless all the time, work and money you’ve put into trying to avoid it.

Which of your assets do you assign to your Living Trust, and at what point do you do so? It’s impossible (or at least highly inappropriate) for an attorney to try and advise you on specific accounts, assets, retirement plans, and insurance policies to be funded into in your Living Trust. Instead, we always urge our clients to communicate with their financial advisors regarding each of these specific assets to receive detailed answers applicable to their specific situations.

Your financial advisors are those individuals who know your personal and family assets, accounts, insurance policies, and retirement plans. They are also properly licensed and accredited to provide specific financial advice and actions. Often these will be individuals who are financial planners, CPA’s, and investment advisors. These individuals know your individual assets and are educated on how to appropriately designate each to effectively flow into your trust while simultaneously avoiding the pitfalls along the way.

In order to properly fund your trust, you and your financial advisor must make 100 percent certain that you have correctly funded such key assets as:

  • Retirement accounts
  • Real estate
  • Insurance policies
  • Business and bank accounts
  • Investment accounts
  • Pension plans
  • Annuities

Properly funding a trust is not one of those areas where you want to make educated guesses or assumptions on how to evaluate and properly designate specific assets into the trust. Even if the client is financially-savvy or a member of financial services industry, I still recommend that he/she still reach out to an advisor to assist in this process and as a second set of eyes to evaluate the funding of a trust. This is not a process where you want to assume or guess incorrectly. Incorrect decisions can lead to multiple problems both before and after death to your assets.

When properly implemented and funded, a Living Trust will save your survivors unnecessary stress. Attorneys can create the correct legal structure and framework necessary for a trust.  However, it’s up to you receive the greatest benefit by properly funding that trust. We encourage you to ask your financial advisor what steps you need to take – and then make certain that you’ve taken them.

You can find other articles about Estate Planning from the Harrison Law blog HERE, HERE, and HERE.  

© 2020 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.