The question of whether you need to list specific assets in your will to fund a trust is a common one, and the answer is nuanced; generally, you do not need to *specifically* list every single asset, but your will must clearly direct the transfer of assets into your trust upon your passing. A properly drafted “pour-over” will is the key, acting as a safety net to catch any assets unintentionally left outside the trust. This ensures that even overlooked possessions ultimately benefit your intended beneficiaries, as nearly 40% of Americans die without a will, leaving assets subject to potentially lengthy and costly probate processes.
What happens if I forget to include an asset in my trust?
Forgetting to title an asset in the name of your trust is a surprisingly frequent error. Imagine Mrs. Gable, a retired teacher, meticulously funded her trust with her home, stocks, and brokerage accounts. However, she overlooked a small, but sentimental, antique coin collection she’d accumulated over decades. Upon her passing, the coins weren’t titled in the trust’s name, so they became subject to probate – a costly and time-consuming process that delayed her daughter receiving the inheritance. Without a pour-over will, this oversight could have meant those coins becoming entangled in the court system for months, or even years, incurring legal fees and causing emotional distress for her family. A pour-over will solves this by specifically directing *any* assets not already in the trust to be transferred in after death.
How does a “pour-over” will actually work?
A pour-over will acts as a catch-all, instructing the executor to transfer any assets held in your name individually at the time of your death *into* your existing trust. It essentially “pours” those remaining assets “over” into the trust. This is particularly important because assets can be acquired *after* the trust is established – perhaps a new investment account, an inheritance, or a piece of property. While you can update your trust to reflect these new holdings, it’s not always done consistently. The pour-over will ensures that these later-acquired assets are still governed by the terms of your trust, avoiding probate and ensuring your wishes are carried out. It’s estimated that assets transferred through probate can incur costs ranging from 3% to 7% of the estate’s value – a significant sum that a well-structured trust and pour-over will can help avoid.
Can I simply list all my assets in my will, instead of funding the trust?
While you *can* list assets in your will, that effectively means those assets will go through probate. Probate is the legal process of validating a will and distributing assets, and it can be both time-consuming and expensive. In California, probate can take anywhere from six months to two years, and legal fees can quickly add up. Furthermore, the probate process is public record, meaning anyone can access information about your assets and beneficiaries. A trust, on the other hand, offers privacy and allows for a much smoother and faster transfer of assets. Consider Mr. Chen, a small business owner, who initially decided to forgo funding his trust, thinking a simple will would suffice. After his passing, his family faced a lengthy and stressful probate process, delaying their access to funds needed to keep his business afloat.
What’s the best way to ensure my trust is properly funded?
The most effective approach is a combination of initial funding and regular review. Work with an experienced estate planning attorney like myself to not only establish your trust and pour-over will, but also to create a funding checklist and assist with the initial transfer of assets. Then, schedule annual or bi-annual reviews to update your trust with any new acquisitions or changes in your financial situation. I recall working with the Hayes family, who diligently followed our recommended funding schedule. When their patriarch passed away unexpectedly, the trust was fully funded, and the family received their inheritance within weeks, avoiding the headaches and expenses of probate. This proactive approach, combined with a well-drafted estate plan, provides peace of mind knowing your wishes will be carried out smoothly and efficiently.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
(619) 550-7437
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