Funding Your Living Trust

Hopefully by now you’ve heard about the benefits of having a living trust as part of your estate plan. The most notable benefit is the ability to keep your assets from having to go through probate. You can retain control of assets during your life, and exercise control over how they are managed and used after your death. A trust can reduce, and in many cases eliminate income, estate, and capital gains taxes on assets.

Meeting with a skilled estate planning attorney and creating the best type of trust for your particular needs is a big step. Creating the trust, however, isn’t all you need to do. Consider how silly it’d look if you bought a safe deposit box or opened a bank account, but never put anything in it. They can only protect your assets if they’re inside. If you die or become incapacitated and your trust is not funded, it is mostly useless, no matter how well-drafted it might have been.

How to Fund a Living Trust

So how exactly do you go about funding a living trust? That depends on the nature of the assets intended to be placed in the trust. Many types of assets can be used to fund a trust by re-titling them in the name of the trust.

For instance, if your name is John Doe and you currently have a bank account or cars in your sole name, you could change the name on the bank account or vehicles to that of the trust, with yourself listed as trustee of the trust. Also, if you are married, you and your spouse can both be listed on an account as co-trustees.

Other assets that can be re-titled in order to fund a trust are real estate, stocks, and other investment accounts. Legal requirements for funding a trust with real estate are somewhat complicated, and it is best to have an attorney’s assistance to make sure you use the right type of deed and that it is properly prepared. More likely than not, you will deed the property directly to the trust.

Certain types of assets may be used to fund a trust by designating the trust as the beneficiary of those assets. Many of our clients choose to make their trust the primary beneficiary of their life insurance policies. This allows the client to have lots of control on how the policy proceeds are disposed of at the death of the policyholder. Annuities or retirement accounts, including 401(k), 403(b), and IRAs can also fund a living trust after death through beneficiary designations.

Having retirement account assets payable to certain trusts can significantly reduce the tax deferral period for your taxes. On the other hand, other trusts can enhance the likelihood of attaining the maximum stretch-out period for your heirs. At the Law Office of Rodney Davis, LLC, we can assist you in re-titling your accounts to avoid a bad outcome.

Getting the Help You Need to Fund Your Living Trust

If you have not yet had your attorney draft your trust, prepare a list of the assets that you want to place in the trust. Understanding how you plan to fund your trust will help your attorney guide you in doing so efficiently. If you have created your trust, but have not yet funded it, don’t delay, act now! Call our office today to learn how you can fund your living trust. 

Where Should I Store My Estate Planning Documents?

One of the most common questions that estate planning attorneys are asked is where original estate planning documents – Wills, Trusts, Powers of Attorney, and Health Care Directives – should be stored for safekeeping.  While there is no right or wrong answer to this question, there are a few things to consider: Continue reading Where Should I Store My Estate Planning Documents?


What is Asset Protection?

Asset protection includes the concepts of and strategies for guarding one’s wealth. Asset protection is a type of planning intended to protect one’s assets from creditor claims. Individuals and business entities use asset protection techniques to limit creditors’ access to certain valuable assets, while operating within the bounds of debtor-creditor law. 

Asset protection is one of the most unappreciated topics of estate planning. As a result, many people end up having their retirement account accounts, family homes, insurance policies and other valuable assets either lost or greatly diminished because they’ve failed to put an asset protection plan into place. In order to avoid these types of losses you need the counsel and guidance of an estate planning attorney to explain the legal requirements surrounding asset protection. The Law Office of Rodney Davis, LLC is here to help you make sure that your assets are legally protected. Just give us a call at (205) 578-1597 or click here to learn more about asset protection.

Why Do I Need Asset Protection?

While there are various reasons to consult with an estate planning attorney about an asset protection plan, there are two very common reasons why you should consider asset protection:

Reason #1: Lawsuits

This is one of the main reasons why individuals and businesses need asset protection. On many occasions, frivolous lawsuits are filed by one party knowing full well the other party would prefer to settle out of court rather than go through a lengthy and disruptive court proceeding. To counter, do asset protection planning and implement asset protection strategies.

Reason #2: Probate of Estates

Another reason for asset protection information is that it is difficult to transfer assets to your heirs without excessive loss due to probate and taxation. Not only is probate a lengthy process – it encourages family infighting – it can severely erode your families assets. Did you know that when Elvis Presley died all that was left of his 10 million dollar estate was 2 million dollars? This was definitely a case where no asset protection planning was taken to implement asset protection strategies.

Consider yet another example of how little or no asset protection planning can cause you to lose assets:

An engineer and a nurse lived together for years, but never got married. They decided to purchase a home together and put in the real estate documents that they were buying the home as tenants in common instead of as joint tenants with a right of survivorship. They did this thinking that if one of them died the other person would get the house. However, they were badly mistaken, and when the engineer died without leaving a will his interest in their home went to his sister (who did not get along very well with the nurse). In the end, the nurse was forced to leave the home. Had the engineer and nurse contacted an attorney to implement an effective asset protection plan, the nurse could have remained in her home.

Timing is Key

When you want to protect your assets from future claimants, the more proactive you are the better off you will be. If you believe you are about to be sued, it is likely to late to start the asset protection planning process. If you are in a profession that comes with significant liability, you have accumulated a lot of wealth, or your home is now worth more than the mortgage you have on it, it’s time to do some asset protection planning for your future. The point is, you have to plan to protect your assets before it is too late. It is never too early to implement a plan to keep your assets protected, but it can be too late once you are the subject of a lawsuit or in the event of a loved one’s death.

If you or someone you know is concerned about avoiding the above problems and issues, please contact our office at (205) 578-1597 for a consultation on asset protection planning.