The question of what happens if you pass away before fully funding your trust is a common and critical one for estate planning in San Diego, and it’s a scenario Ted Cook addresses frequently with clients. It’s easy to create a trust document, but the real magic happens when assets are *transferred* into the trust – this is the ‘funding’ process. A trust, even a beautifully drafted one, remains largely ineffective if it doesn’t hold any assets at the time of your death. This can lead to probate, the very thing the trust was designed to avoid, and unnecessary complications for your loved ones.
What happens to assets *not* in the trust?
If you die before all your intended assets are transferred into your trust, those remaining assets will likely be subject to probate. Probate is a court-supervised legal process that validates your will (if you have one) and distributes your assets according to its terms, or, if there’s no will, according to state intestacy laws. In California, probate fees can be substantial – typically around 4-8% of the gross value of the estate, even for relatively small estates. For instance, an estate valued at $500,000 could incur $20,000 to $40,000 in probate fees alone. This process can also be time-consuming, often taking months or even years to complete, adding emotional stress to an already difficult time for your family. A properly funded trust bypasses probate, allowing for a quicker and more private transfer of assets to your beneficiaries.
Can a “pour-over” will help if I haven’t fully funded my trust?
A ‘pour-over’ will is a crucial component of a comprehensive estate plan, even with a trust. This type of will directs any assets owned in your name at the time of your death to ‘pour over’ into your existing trust. While it doesn’t eliminate probate entirely, it simplifies the process and ensures that even overlooked assets eventually find their way into the trust for distribution according to your wishes. “It’s like a safety net,” Ted Cook explains to clients, “it catches anything that falls outside the trust and brings it in, but it still requires a mini-probate to transfer those assets.” However, remember that assets passing through a pour-over will are still subject to probate fees, though often reduced compared to a fully probated estate. A recent study by the California Courts revealed that over 60% of probate cases involve estates valued under $300,000, highlighting the significant impact of probate fees on smaller estates.
I started funding my trust, but life got in the way – what now?
It’s remarkably common for people to begin the trust funding process and then get sidetracked by life’s demands. Perhaps they encountered confusion about which assets to transfer, or they simply put it off due to procrastination. Ted Cook once worked with a client, Eleanor, a retired teacher who diligently created a trust but hadn’t fully funded it. She intended to transfer her brokerage account, but kept delaying it, thinking she had plenty of time. Sadly, Eleanor passed away unexpectedly after a short illness. Her family was shocked to discover that the brokerage account, representing a significant portion of her estate, was subject to probate, costing them thousands of dollars in fees and delaying the distribution of funds to her grandchildren. This situation underscores the importance of completing the funding process as soon as possible. “Don’t let a perfectly good trust gather dust,” Ted Cook often advises.
How can I ensure my trust is fully funded and my family is protected?
The key to ensuring your trust is fully funded is a systematic approach and ongoing review. I recall working with the Millers, a young couple with two small children. They created a trust to protect their assets and ensure their children were cared for in the event of their untimely deaths. However, they continued to acquire assets – a rental property, additional stock options, and life insurance policies – without updating their trust. Ted Cook helped them schedule an annual trust review to identify any newly acquired assets and ensure they were properly titled in the name of the trust. He also assisted them with preparing a funding checklist and provided guidance on the necessary paperwork. This proactive approach provided the Millers with peace of mind, knowing that their estate plan was up-to-date and would protect their family in the future. Regular reviews, combined with the assistance of an experienced estate planning attorney, can prevent costly mistakes and ensure your wishes are carried out as intended.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
(619) 550-7437
Map To Point Loma Estate Planning Law, APC, an estate planning lawyer: https://maps.app.goo.gl/JiHkjNg9VFGA44tf9
| Ocean Beach estate planning attorney | Ocean Beach estate planning attorney | Sunset Cliffs estate planning attorney |
| Ocean Beach estate planning lawyer | Ocean Beach estate planning lawyer | Sunset Cliffs estate planning lawyer |
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