619-515-1498Incorporating a Trust into your estate plan is a wise choice, providing benefits such as probate avoidance, enhanced privacy, and asset distribution according to your wishes, along with potential lifelong asset protection for your loved ones.
However, it’s crucial to understand that merely creating a Trust is insufficient. To ensure your Trust functions as intended, it must be funded correctly and periodically updated.
Funding your Trust involves transferring ownership of assets from your name to the Trust’s name, including bank accounts, investments, real estate, and valuable possessions. Proper funding guarantees that your assets will be managed according to your Trust’s terms and distributed according to your wishes upon your passing or in the event of incapacity.
Neglecting to fund your Trust reduces it to an empty vessel, rendering your assets unprotected and distribution ineffective, thus defeating the purpose of establishing a Trust. Even if your assets eventually enter the Trust after your demise, it necessitates a costly court process.
To ensure the effectiveness of your Trust, avoid these common pitfalls and collaborate with an attorney experienced in comprehensive estate planning.
Neglecting to Update Account Beneficiaries
Many individuals mistakenly assume that a Will or Trust alone suffices to dictate the distribution of their financial accounts after their passing. However, this is not the case. Without proper beneficiary designations on your accounts, your wishes may go unfulfilled, and your assets could end up in unintended hands.
Beneficiaries designated on your accounts take precedence over instructions in your Will or Trust. Hence, this step is of paramount importance.
Review all your accounts, including bank accounts, retirement plans, and life insurance policies. Confirm that each account designates your Trust as the beneficiary, unless you’ve made alternative arrangements for specific accounts.
When working with an attorney, ensure that your lawyer devises a plan for each beneficiary-designated asset, communicates the plan to you, and mutually determines who will oversee the beneficiary designation updates. Regularly reviewing your beneficiary designations is essential. Our office provides support to clients through well-documented asset inventories and a periodic review process integrated into all our plans.
Failing to Include Your Home in Your Trust
For many, their home is the most valuable and significant asset. If your attorney neglects to transfer your home into your Trust through a deed, it won’t be covered by your Trust in cases of incapacity or death.
This oversight could result in your home undergoing a lengthy and costly probate court process for management during illness or distribution to your loved ones after your passing. This could lead to significant financial loss for your family.
While a knowledgeable estate planning attorney should not overlook this step, it can occur. When using DIY online services to create a Trust without legal assistance, this mistake becomes even more likely.
Therefore, it’s crucial to collaborate with an attorney who meticulously ensures that every asset you own is included in your Trust before finalizing your estate plan.
Neglecting Plan and Account Reviews Every Three Years
You might wonder how failing to review your estate plan every few years could diminish its value. While not reviewing your plan may not completely negate its benefits, it can result in substantial issues for you and your family, potentially rendering your Trust nearly useless.
Your Trust can only control assets that are designated under its ownership or beneficiary listing. By reviewing your accounts every three years, you can identify any accounts lacking Trust designation.
For instance, it’s common for clients to open new bank accounts and forget to title them in the name of their Trust or include their Trust as a beneficiary.
Our practice involves conducting regular financial account reviews for our clients, comparing their accounts to their estate plans every three years. This helps identify oversights, ensuring that all assets are correctly included in their Trusts.
Comprehensive Planning with a Lifetime Family Lawyer
Creating legal documents is a crucial step in estate planning, but it’s equally vital to recognize that documents alone are not magical solutions. They require careful coordination to achieve your intended goals. Attempting to coordinate these components without estate planning experience can lead to problems.
This is why I work closely with my clients, not only to draft documents but to create a comprehensive plan that addresses all their assets and how each should be titled to fulfill their intentions.
Additionally, I provide clients with a complimentary review of their plans and financial accounts every three years, ensuring their plans align with their lives and their wishes for their assets and loved ones.
If you’d like to learn more about my approach to funding your Trust and ensuring no assets are left out of your plan, please schedule a free 15-minute discovery call.
We hope this helps give you some perspective and information and look forward to talking with you. If you’re interested in creating an estate plan to protect your family and loved ones, and keep them out of court and conflict, we would love to speak with you. Reclaim Your Legacy!
Avoiding Estate Planning Missteps. When it comes to estate planning, avoiding missteps is crucial for ensuring your wishes are carried out smoothly. Procrastination: Delaying estate planning can lead to complications and uncertainty. Incomplete Documentation: Failing to update or properly document your estate plan can result in unintended consequences. Lack of Professional Guidance: Seeking advice from an experienced estate planning attorney can help you navigate potential pitfalls and create a comprehensive plan.
Book your free 15 minute discovery call here.
In Your Service,
PS – In my mind, the real purpose of a properly executed Estate Plan is to take care of the people you love, protect your family for the future, maximize the assets you pass on to the people you love and cherish, and keep your family out of Court and out of Conflict. This is a very important and noble part of LIVING! Lavelle Law Group, APC would be honored to help educate you and assist you and your family with this important part of life.
Let’s talk –
Joseph Lavelle (Lavelle Law Group)
1350 Columbia Street, Suite 500
San Diego, CA 92101
(619) 515-1498
