Getting a trust is only the first step to making it effective. You also need to put your assets in it.
One of the most common estate planning mistakes is known as an “unfunded” trust. It happens when people have trust documents drawn up and executed, but they do not transfer any of their assets into the trust.
The trust is essentially empty. When the person passes away, it has nothing to do in some cases.
There are no assets for the trustee to manage and distribute to the trust beneficiaries, as directed by the trust.
What happens after the trust settlor passes away with an unfunded trust varies, as the NWI Times discussed in "Estate Planning: Unfunded Trust."
In the best case scenario, the deceased did create a will providing that any assets in the estate be placed into the trust. This is called a pour over will.
As long as no one challenges the estate, then a probate judge will allow assets to be transferred to the trust and everything should proceed normally from there. However, things can get very messy, if there is no will or a non-pour over will.
Under those circumstances, getting assets into the trust can be very difficult, if not impossible.
The best thing to do is to avoid this problem.
After getting a trust, make sure that you fund it.
If you do not know how to transfer assets into the trust, then ask your estate planning attorney. The attorney who helped you get the trust can help you fund it.
Reference: NWI Times (May 7, 2017) "Estate Planning: Unfunded Trust."
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