The late actor Heath Ledger had a last will and testament. Unfortunately, he didn’t update it when his daughter, Matilda, was born. Because it was never updated, his last will and testament stated that his estate would go to his parents and siblings. The family says that they have gifted everything to Matilda, so her mother, Michelle Williams, did not have to file a claim in the probate case, but Heath Ledger’s lack of updating could have resulted in a drawn out court battle. Having a trust or a will is a big step in taking care of your loved ones. But you can’t stop there.
In an earlier article, we discussed the fact that signing your estate planning documents is only the beginning of the estate planning process. An important part of keeping your estate plan is up to date is funding your trust. Funding is the process of transferring your assets from your current ownership to the name(s) of the trustee(s) of your trust. This should be ongoing throughout your life as you open new bank accounts, close accounts, and buy or sell property.
Mad Money Mishap
Here is another example of what could happen if a person doesn’t keep up with funding her trust throughout her life. In this scenario, a mother had a separate account just to have some fun money for gifts and splurges. She never intended it to have a lot of money in it and forgot to transfer it to her trust. At her death, it turns out that there is $8,000 in the account. It is the only asset in her individual name, there is no joint owner, and she never added her husband, her children or the trust as a beneficiary. After her death, in order to transfer the account to the trust, a probate administration must be opened in court. Even for a small probate matter, court filing and attorney fees will be charged. This situation is preventable because the mother could have avoided probate by retitling the account into to the name of the trustee of her trust. Avoiding probate is a goal that can be accomplished with a properly funded trust.
As we go through life, things change. Children and grandchildren are born. We open bank accounts. We buy and sell real estate. We change jobs and roll over 401k accounts into IRA accounts. It is important to periodically review your estate plan and to review your assets to make sure that your trust is funded properly. Sounds like work, doesn’t it? We have a program that shifts the work of reviews and updates to our staff. Stross Law Firm now offers an estate planning maintenance program, Peace Of Mind A Life Plan for Everyone, so that you can rest assured that your loved ones will be taken care of. Stay tuned for more blog posts that will explain other scenarios about trust funding.
This article is not intended to provide legal advice or encourage anyone to do trust funding without the guidance of an estate planning attorney. Call us at 813-852-6500 to schedule a free 30 minute consultation with one of our estate planning attorneys.