Failure to Fund Your Trust

  • Posted on: Apr 30 2021
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More and more Californians are turning to revocable trusts in order to try to avoid the long and expensive probate process. But what some of these individuals fail to realize is that assets in this trust can only be protected if they are retitled in the name of the trust. While a qualified California estate planning attorney can help you to properly establish a revocable trust, only you can transfer the ownership and title of your assets to the trust. This process, also referred to as “funding,” is your obligation. 

Failure to Fund or Under-funding Your Trust

After establishing your trust, an estate planning attorney can help to explain to you which of your assets should be transferred into it, and how you must go about doing so. Due to misunderstanding or forgetfulness, many individuals who have a trust set up fail to retitle their assets to the trust, in which case the trust remains under-funded. Additionally, since many people fail to continue managing their assets and their trust after first setting it up, many people forget to include assets in the trust that are acquired at a later date. 

Unfortunately, when you fail to fully fund your trust, it takes away from one of its purposes: to avoid probate. Only those assets that are included within a trust can be protected by it. Those that remain outside of the trust at the time of the trustor’s death are subject to distribution via probate.

Protecting Assets Left Outside of the Trust

As we’ve discussed, those assets that have not been retitled or assigned to the trust must be subjected to the probate process. But with the probate process being so lengthy and expensive, it can put your loved ones through a lot of added aggravation. Luckily, there may be a couple of different ways in which to prevent these assets not included in your trust from going through probate:

1. File a Heggstad Petition

When you file a Heggstad petition, you are essentially asserting that it was the trustor’s intention to include the assets that have been forgotten into the trust. A court must examine and review any available evidence demonstrating the trustor’s intent in order to determine whether it agrees with this assertion. 

2. Create a Pour-Over Will

Another option is to create a pour-over will. A pour-over will, though subject to probate, allows for the provisions of the trust to guide the distribution of the left-out assets. Pour-over wills act as supplements to revocable trusts, which is why even those who believe that they have fully funded their trust may still establish one. A pour-over will provides additional protection concerning assets that the trustor failed to notice or those that were unable to be transferred before the trustor passed away. 

The Law Offices of Brian L. Fox, APLC Help those Who Wish to Protect Assets and their Loved Ones

If you or your loved one live in California and have any questions regarding your trust, a pour-over will, reassigning your assets, or anything of the matter, it’s in your best interest to consult with a qualified California estate planning attorney who can help to guide you through the whole process. 

At the Law Offices of Brian L. Fox, APLC, we know how important it is to protect that for which you’ve worked so hard and those whom you love so much. We will help you to establish a comprehensive estate plan that meets your needs. To learn more or to schedule a free consultation, contact us today!

Posted in: Wills and Trusts