The Importance of Funding Your Trust

elderly couple going over estate plan

The probate process, which helps to ensure that someone’s assets go to the correct places and people after they pass away, can be long and expensive. For that reason, many people are searching for a way in which they can avoid probate altogether. Many people are creating revocable trusts in order to avoid probate. However, what some people fail to understand is that in order to protect your assets from probate they must actually be retitled in the name of the trust. This process of transferring the ownership and title of your assets to your trust is known as “funding your trust.”

What Happens if You Don’t Adequately Fund Your Trust?

Once you have created your trust, it’s important to understand which assets you want to transfer into it and how you can do so. Unfortunately, many people create a revocable trust for themselves but forget to fund it adequately – or at all. Many people fail to retitle their assets into the trust, which leaves it underfunded. Additionally, many people fail to continue to manage the assets in their trust after they first do so, which leads to many assets that are acquired at a later date being excluded from the trust. 

So, why is this an issue? Well, when you don’t fully fund your trust, it works against one of the main reasons you may have set it up, to begin with: to avoid probate. Only the assets that are included in the trust can be protected by the trust. Any assets that are not included in the trust at the time of the trustor’s death, are subject to the probate process. 

Preventing Assets from Going through Probate – Even if They’re Left Out of Your Trust

While assets must be “placed” into your trust in order for the trust to protect them from the probate process, it doesn’t mean you’re left without any remedy should these assets not be included. Here are a couple of ways in which you can still protect the assets not included in your trust from going through the probate process.  

Create a Pour-Over Will

Even though it is still subject to probate, a Pour-Over Will will allow for the provisions of the trust to guide the assets that you left out of the trust. Essentially, a pour-over will acts as a supplement to a revocable trust. Therefore, even if you believe that your trust is fully funded, it may still be in your best interest to establish a pour-over will. 

File a Heggstad Petition

A Heggstad petition essentially states that it was the intention of the trustor to include the assets that were not included in the trust. In order for the court to determine whether it agrees with this assertion, it must take a look at all of the available evidence concerning the intent of the trustor. 

 Surovell Isaacs & Levy PLC Can Help Those in VA with their Estate Planning Needs

The best way to protect assets not included in your trust is to make sure you include them in the first place. You can do so with the help of a knowledgeable and experienced Virginia estate planning attorney. However, even if all assets were not adequately included, a qualified estate planning attorney can still help. 

At Surovell Isaacs & Levy PLC, we will help you to ensure that your estate plan protects you and your loved ones as you intend it to. To learn more or to schedule a consultation, contact us today!

Posted in: Estate planning/Trusts