Trust Funding

estate planning

We were in the final stages of creating an estate plan for a client we’ll call Mary (not her real name). Like many people her age, Mary had given up her driver’s license, and her son John (not his real name) had accompanied her to our offices.

After completing the work we asked John about his own estate planning needs.

“I am all set,” he said. “I had an estate plan and trust created within the past year.”

Fortunately, we asked a few more questions… Like many people, John had not recognized the importance of funding the trust and he had not done so!

A Trust is Like a “Bucket”
Apparently he had not been told that a trust is like a bucket a person carries through life. While carrying the “trust bucket” the person can decide what they’d like to place into it, thus “funding” the trust.

They can also decide who should carry the bucket for them should they become unable to do so, and also how the assets within the bucket should be distributed when they die.

Because John’s trust was never funded, if he became incapacitated or if he died, the probate court would decide how to distribute his assets. As you may well know, this process can be costly! Based on his estate, we later estimated that had his trust not been funded and he died, the cost for probate would have exceeded $20,000.

In addition, by funding a trust in advance, potential family disagreements can be avoided as it is often difficult for various family members to agree on how the assets
should be allocated.

An estate plan with a funded trust provides a good way to circumvent unnecessary costs of probate as well as family disagreements and angst.