Signing your estate planning documents is an important step, but it is not always the last one.
One of the things we discuss with clients after completing a living trust is what needs to happen next. A trust works best when the assets that are supposed to be part of it are properly connected to the plan.
This is known as funding the trust.
For example, real estate may need to be transferred into the name of the trust. Other assets may require different steps. Some accounts, including many retirement accounts, are generally handled through beneficiary designations rather than being transferred into the trust.
Beneficiary designations should be reviewed as part of the overall plan. Life insurance and retirement accounts can pass according to the beneficiary you have listed, so those designations should make sense alongside your trust and other estate planning documents.
It is also important to know where your documents and important financial information are kept. Your family does not need to know every detail of your finances, but the people who may need to step in should be able to find the information they need.
Finally, do not assume that your estate plan will always remain appropriate simply because it was properly prepared.
Life changes. You may buy or sell property, experience a change in your family, receive an inheritance, or decide that you would prefer a different person to serve as your trustee or agent.
These are all good reasons to have your plan reviewed.
A living trust is meant to make things easier for you and your family. Taking care of the practical steps after signing, and reviewing the plan when circumstances change, helps ensure that it continues to do what you intended.
FAQs
What does it mean to fund a living trust?
Funding a living trust generally means transferring appropriate assets into the name of the trust. The process depends on the type of asset.
Do I need to change the beneficiaries on my accounts?
Not necessarily, but beneficiary designations should be reviewed to make sure they are consistent with your overall estate plan.
What should I do after signing my living trust?
Make sure the trust is properly funded, review beneficiary designations, keep your documents accessible, and have the plan reviewed when significant circumstances change.