Utilizing a trust for an estate plan has its benefits, many of them financial and legal. However, without property in the trust, the document is simply just a document and nothing more.
Creating the trust is only the first step along the way. It is equally as important that the trust be funded before everything is finalized.
What is a Trust?
A trust essentially is its own separate legal entity where the creator of the trust, often referred to as the grantor or settlor, puts his or her assets into the trust.
The document includes instructions for how the settlor wants his or her financial affairs handled during his lifetime, incapacity, and subsequent death.
Many different types of trusts exist: revocable, irrevocable, or testamentary trusts. The most common trust is a revocable trust.
What Does It Mean To Fund The Trust?
However, for trusts to be effective, the trust has to be funded, meaning the property of the settlor has to be changed to the name of the trust or have the trust named as the beneficiary. Otherwise, the settlor only has a document and nothing more.
It is important that the title for the property has the trust’s name on it. Different pieces of property require different documentation to properly transfer the property.
Who Controls The Trust’s Assets?
Normally, the settlor is the initial trustee and would remain in control over the assets in the trust. Only until the successor trustee takes control would the settlor no longer have the ability to control the trust assets but may still be entitled to the benefit of the trust assets.
Why Is Funding The Trust Important?
Most individuals utilize trusts with the purpose of avoiding probate. However, if the property is never transferred to the trust, the property has to go through the probate process. It is for this reason that as soon as the trust is executed, so should the documentation to transfer the title for property.
Which Assets Should Be Transferred To The Trust?
It is ideal that as much property as possible should go into trust. The following types of property are ideal for transferring into trust.
- Real Estate: One of the most valuable assets that a settlor has is arguably his or her real estate. It is important that the title for the real estate is transferred from the homeowner to the name of the trust. An attorney can assist in preparing this transfer properly.
- Out-of-State Property: If the settlor owns property that is out-of-state, it is important that the title of this property is also transferred into the trust to avoid probate in that state.
- Property with No Title: Personal property, such as jewelry, sporting equipment, clothing or artwork, does not come with an official title. However, an attorney should be able to prepare an assignment to transfer these items of personal property to the trust.
Property Left Out Of Trust
A car is one item of property that does not need to be transferred into the trust. Because individuals purchase cars on a regularly basis, it would be cumbersome to continuously change the title of the car to the trust.
The State of Georgia allows for use of a pour-over will to have property that was either intentionally or inadvertently left out of the will briefly go through probate before it is funneled through to the trust.
Further, the settlor can also name a beneficiary for property so that the property goes to the beneficiary upon the death of the settlor and avoid the probate process completely.
Subsequent Property Purchased
What happens if the settlor purchases property after the trust is executed and the property transferred? An estate attorney can help the settlor prepare the necessary paperwork to transfer the new property in to the trust.
Contact Brian M. Douglas & Associates Today
If you are not sure you need an attorney, you can always come in for a consultation to discuss your situation. Please contact our office if you or someone you know has recently been appointed personal representative of a loved one’s estate and has questions about what to do next.
Call us at (770) 933-9009 to schedule a consultation with a Greater Atlanta area probate lawyer today.