Continuing my series on using legal documents to protect your estate and your family, I’ll take a look at Patrick Herring’s “The Revocable Living Trust Handbook”. This book, the third in the series, looks at what a revocable trust does and doesn’t do, as well as what it can do and what it can’t do.
Patrick’s book takes the reader inside the world of trusts and protecting your money and assets in order to take care of your heirs after you have passes away. With all of the talk today about trusts, it can be a little confusing when it comes to options you and your family have. Patrick’s book will cut through the noise and try to simplify things for you when you are in the middle of estate planning.
Funding a Revocable Living Trust
…Funding is often the difference between a trust that works in paper and a trust that works in real life.
Patrick Herring
One of the most important parts of setting up a trust is making sure it is properly funded. Someone passing away doesn’t mean the bills stop coming in. Property maintenance and everyday finances continue, so it is important that bills are still paid and the property is taken care of, especially if the house is to be sold. Letting the house fall into disrepair can make for more problems down the road if it is to be sold.
Patrick’s book takes the reader through the proper steps and channels when setting up a trust. One of the most common misconceptions of trusts is that creating the legal document automatically moves assets into the trust. There is more to it than that. Signing the trust creates the document, but moving assets for expenses and heirs is another step that requires further action.
Trust funding does matter, but every asset can be handled differently. Stock portfolios, bank accounts, and retirement accounts are just some of the assets that must be examined when it is being placed into the trust. Who you want to have these assets is another aspect of the trust that must be looked at. Relationship dynamics can change. People you were close to may have moved away or don’t share a close relationship with you anymore. People you thought would have what you worked for could die before you.
Avoiding Complications
There is a lot of important information in Patrick’s book. The basic things that will help you when planning a trust is that setting up a trust doesn’t automatically protect your home, car, or other assets. Creating a trust can avoid probate, but as Patrick writes, “Avoiding probate doesn’t mean avoiding all work after death.”
Throughout this occasional series, I have mentioned how important it is to make sure everything is prepared and accounted for. This will make sure things can be as painless and easy as they can possibly. Emotions can be running high during this time, making sure everything is in place and obligations are met and paid for can help make things easier. Records need to be understandable in this type of situation, they do not need literary prose or anything to make them look pretty. They just need the family to understand them so final wishes can be honored and complications can be minimized.
A trust funding checklist is useful not because it’s complicated, but because it keeps you from assuming everything is still in place when new assets or new paperwork may have changed the picture.
