If you have created and funded a revocable living trust, you need to continually add assets into that trust to keep them protected. If, however, you don’t include all of your assets, there are a few things that could happen to the assets left out.
Any assets not given to your trust when you die will automatically go through probate court. The probate court judge will have to determine where those assets are distributed, unless you have otherwise specified in your will.
If you left assets out of your trust, they could be subject to estate tax. While this may not impact you, it could severely impact any beneficiaries associated with your estate. Therefore, you may have just wasted your entire tax exemption by using a trust if you don’t fund it in the first place.
The Bottom Line
If you overlook funding your trust, you will have an estate plan that is virtually useless. While some portions certainly will protect your loved ones, your trust will not have the same benefits it did when it was fully funded. Therefore, sit down with your estate planning attorney yearly and make sure all of your assets are included within your trust. Your attorney can help you pre-plan and make sure your trust remains properly funded just by setting up an annual maintenance program with your estate plan.
In addition, you may want to sit down with your attorney and make sure all assets that go to your trust match up with any beneficiaries listed in your will. Simple oversights can cause issues for your loved ones if your estate ever does have to go through probate.
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