You’ve gone to a lawyer, your revocable trust has been drawn up, documents have been signed and notarized—congratulations! You’re done! Right?
Not so fast.
Where real estate is concerned, yes, your trust is probably on solid ground—most law offices prepare and record deeds to put your properties into the trust. But what about other financial assets? Do you have any investment accounts such as an Individual Retirement Account (IRA) or any mutual funds? What about life insurance policies, bank/savings accounts, or any other business interests or notes payable to you?
If your answer to any of these questions is yes—and most of us have some of these—then you’re not done.
Often, what happens is that a settlor—that’s the person who established a trust—thinks that by reporting their intentions for these accounts that they’re automatically included in the trust. That’s a mistake.
Intentions aren’t enough. Such assets will remain outside the trust—and vulnerable to probate—unless some necessary steps are taken.
A common mistake that people make
It’s easy to think only in terms of big-ticket items—like a house, for example, or other rental properties. The fact is, most estate planning firms will move such assets into your trust as a part of the service they provide to clients.
But when it comes to your other financial assets—as described earlier—these firms often won’t go the extra mile to make these transfers. They won’t leave you entirely in the dark, though: In most cases, they provide their clients with instructions about how to do it themselves. In our experience, these instructions aren’t followed, as most people think the hard work is done once the trust is signed.
The existing probate rule in California identifies that any asset worth $162,500 or more is subject to probate. If you have a bank accounts or other financial assets that together are below this value, you don’t need to include them in your trust.
However, if you expect these assets to grow in value—especially, for example, an investment account—so that one day they exceed (or at least meet) the California probate requirement, you guessed it: It would be a good idea to include them in your trust now.
That involves contacting each financial institution and changing the title or beneficiary designations on those assets to your trust so that they move unhindered into your trust as part of your estate plan.
Rather than leave this work up to you, or charge an extra fee, our law offices include these asset transfers as a part of our regular service at no extra cost.
The reason why is simple: We know how you feel. We’re thinking about our families and futures just like you. It’s important to us that your trust works exactly the way you want.
- Do you have questions about the trust process? Contact the law offices of Christopher B. Johnson to learn how a trust may benefit your particular situation. Schedule a free consultation now.