A Common Mistake: Failure to Fund a Trust
It’s a mistake that happens all too often. A couple establishes a trust, but fails to put any assets into it. Once both spouses have passed away, the trust become useless.
There are numerous reasons why this happens. For some people, it’s simply a matter of procrastination. Others have established a type of trust that would cause them to permanently lose control of their assets, and they did not want to give up that control too early. But ultimately, an unfunded trust will just be a source of frustration for your estate administrator and your surviving loved ones.
What happens when a trust is unfunded?
Because assets were not placed in the trust, they will need to be evaluated individually to determine ownership. Any jointly owned assets will go to the surviving joint owner. Assets that have named beneficiaries will go to those beneficiaries.
After that, determining ownership of the assets gets somewhat more complicated. Any assets left behind in the decedent’s name without a beneficiary must go through probate, which means those assets will either transfer according to the last will and testament or, in a case in which a will does not exist, per the rules of intestate succession.
If there is a will in place, it should resolve most of these issues. If not, state law determines who gets which property and assets. Thus, it’s important to fund your trust after you have created it. After all, you have already paid the costs and gone through the time-consuming process of creating the trust — you might as well reap its benefits.
To learn more about establishing and funding trusts, meet with a skilled Florida estate planning attorney at The Charles Law Offices.