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Trust Funding

Trust Funding

A Revocable Living Trust must be funded to fulfill its purpose. Trust funding means that the creator of the trust must retitle assets from their individual name, into the name of the trust. If there are no assets in the trust at the time of death, much of the value of the trust is lost. For certain assets, this may mean designating your trust as the beneficiary. It is important to consult with a San Diego trust attorney before deciding to designate your trust as the beneficiary of a retirement plan such as an IRA or 401k.

When establishing a trust, the grantor appoints a successor trustee or trustees to act in the event of incapacity or death. The incapacity and death trustee may be the same person or two separate individuals or groups of individuals. Upon incapacity or death, the successor trustee is responsible for managing the assets in trust, according to the terms of the trust. However, the successor trustee only has the authority to manage those assets that have been retitled to the name of the trust.

Upon incapacity, the Trustee of the trust cannot manage assets that have not been transferred into the name of the trust. If you have a durable power of attorney in place, it may allow the appointed person to manage the assets left out of the trust. However, if there is no durable power of attorney or it does not cover the assets left out of the trust, a lengthy court process known as a conservatorship will be required.

Upon death, assets left outside of the trust will have to go through the probate process, losing one of the great values of estate planning. The San Diego probate courts are overwhelmed due to statewide budget cuts, making probate a very lengthy process for transferring your assets to the intended beneficiaries. Furthermore, if you don’t have a Will, those assets may not go to the beneficiaries you intended and may instead be transferred by state laws of intestacy.

Keeping your Revocable Living Trust funded is an ongoing process. Newly acquired assets must be placed in the name of the trust to be managed by the trust terms. For instance, if you refinance your home, the bank will often require it be transferred out of the trust and back into your individual name. You must remember to transfer the house back to your revocable trust. This is not something the bank typically does for you.

If you are in need of a San Diego probate attorney or a San Diego trust attorney, contact our office today for a free consultation.

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