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By John R. Merlino Jr. Esq.
Founding Attorney

Although many individuals are well served by a will-based estate plan, a will must go through a court supervised proceeding referred to a probate. Depending on the size and the complexity of the estate, this can be a time consuming and costly process. For this reason, we often recommend creating a revocable living trust.

What is a revocable living trust?

This estate planning tool is a legal document that takes ownership of the trust maker’s property. The trust names a trustee, which is also in most cases the grantor, or the person making the trust. The document also specifies the property that is owned by the trust, and designates a successor trustee to manage and distribute the property. In short, a properly designed trust allows you pass assets to your heirs when you die, but also allows you to continue managing the estate while you are alive. Additionally, a living trust can help you plan for incapacity, and minimize estate taxes.

Funding a Trust 101

Once the trust is in place, it is necessary to transfer property into the trust. This is commonly referred to as “funding the trust.” Property that is titled, including real estate, bank accounts, stock, and motor vehicles, must be re-titled in the name of the trust. If the trust is to contain a house, for example, a new deed needs to be prepared, executed and recorded. The deed must correctly show the property is now held by the trust, or else the property may be subject to a probate proceeding.

Additionally, assets that are not titled, including furnishings, jewelry, artwork, heirlooms and other personal property can be listed in the trust document, or these assets can be transferred into the trust with a document known as an Assignment of Property.

Don’t Forget to Create a Pour-Over Will

It is not uncommon for individuals who who set up trust-based estate plans to acquire additional property or assets after the trust is created. In order to ensure that these assets are properly transferred into the trust, it is necessary to create what is referred to as a “pour-over will.” This document ensures that assets that were intended to be transferred into the trust pass through the will and are “poured” into the trust.

The Takeaway

Ultimately, a trust-based estate plan allows you to transfer assets to your beneficiaries while avoiding a probate proceeding. This is because the trust owns the property, provided that it is properly funded. If all the property is not transferred into the trust, or a pour-over will is not created, the property will be subject to probate. In the end, an experienced estate planning attorney can help you put a revocable living trust in place and ensure that the trust is properly funded.

About the Author
John is a fierce advocate and the office guru for problem-solving and brainstorming. He guides clients through every stage of a real estate transaction from offer to contract, navigating through nerve-shattering home inspection and title clearance concerns, maintaining constant contact with lenders, conducting the actual closing, and continuing to advise clients with regard to any post-closing concerns.  John brings a practical and fair-minded approach to the process which has earned him the respect of his clients and peers.