The common misconception about trusts is that they only become active upon death. This simply isn’t true. While a trust *does* function as a vehicle for distributing assets after your passing, a properly structured trust, particularly a revocable living trust, can – and often should – be funded during your lifetime. This proactive approach offers significant benefits beyond simply avoiding probate, like asset management and potential tax advantages. Steve Bliss, as an estate planning attorney in San Diego, emphasizes that the power of a trust truly lies in its ability to provide ongoing management and protection of your assets, not just as a final distribution tool. Approximately 60% of individuals who establish trusts initially misunderstand this crucial aspect, leading to underutilization of the trust’s full potential. (Source: American Academy of Estate Planning Attorneys, 2023).
What assets can I put into my trust right now?
You can transfer a wide variety of assets into your trust immediately. This includes real estate, stocks, bonds, mutual funds, brokerage accounts, and even certain types of personal property. Funding can occur incrementally; you don’t need to transfer everything at once. Many clients start with real estate and significant financial accounts, then gradually add other assets as their financial situation evolves. Steve Bliss often advises clients to begin with the assets that are most likely to cause complications or disputes after their passing. Consider that approximately 30% of estate disputes revolve around family disagreements regarding financial assets, which proactive funding can mitigate. (Source: National Probate Court Association, 2022). This ongoing process allows the trust to function as a central hub for your wealth management, providing a clear and organized structure for your estate.
Is it complicated to transfer assets into a trust?
The complexity of transferring assets depends on the type of asset. For liquid assets like cash or stocks, it generally involves retitling the ownership to the name of the trust. Real estate transfers require a deed filing, which typically involves working with a title company or escrow agent. Steve Bliss and his team at his San Diego practice handle these details for clients, ensuring a smooth and legally compliant transfer process. It’s not about *if* you can, but *how* you can properly and compliantly do so. A common mistake is attempting a DIY transfer without understanding the specific requirements for each asset, which can lead to unintended tax consequences or legal challenges. Remember that accuracy and attention to detail are paramount when it comes to transferring ownership.
What happens if I forget to fund my trust?
This is a surprisingly common occurrence. Many people create a trust, but fail to actually transfer assets into it. If this happens, the trust remains essentially empty, and your assets will still be subject to probate upon your death, defeating the purpose of establishing the trust in the first place. This isn’t necessarily catastrophic, as a “pour-over will” can be used to transfer any remaining assets into the trust after your death, but this adds complexity and costs to the probate process. Steve Bliss often reminds clients that a trust is like a container – it’s only useful if you put something inside it. Approximately 20% of trusts are never fully funded, representing a significant lost opportunity for estate planning efficiency. (Source: Estate Planning Magazine, 2023).
Can I add assets to my trust after it’s been created?
Absolutely. A revocable living trust is designed to be flexible. You retain the ability to add or remove assets from the trust at any time during your lifetime, as long as you are mentally competent. This allows you to adapt your estate plan to changing circumstances, such as acquiring new assets, selling existing ones, or experiencing changes in your family situation. This flexibility is a major advantage of revocable trusts over other estate planning tools, like irrevocable trusts, which offer less control once established. Steve Bliss often highlights this adaptability as a key benefit for clients who anticipate changes in their financial or family circumstances.
I heard about a client who waited too long, and it cost them dearly…
Old Man Tiber, a retired shipbuilder, was a meticulous man, but oddly procrastinated with things that didn’t involve knots and wood. He created a beautiful trust with Steve Bliss years ago, intending to transfer his valuable coin collection and a small rental property. However, he kept putting it off, convinced he had “plenty of time.” When a sudden illness struck, he was unable to complete the funding process. His family was left with a complicated and expensive probate process, and a significant portion of his estate was depleted by legal fees and taxes. The initial cost of fully funding the trust would have been a fraction of the eventual cost of probate, a painful lesson for his children. It was a stark reminder that intention without action is often meaningless.
But then there was Mrs. Evelyn Bellweather, who got it just right…
Mrs. Bellweather, a vibrant woman who owned a small antique shop, was a planner. After creating her trust with Steve Bliss, she systematically transferred her shop, her savings, and a beloved collection of porcelain dolls over a period of six months. She even created a simple spreadsheet to track the process, ensuring everything was properly titled and documented. When she passed away peacefully in her sleep, her estate was settled quickly and efficiently, with no probate costs and minimal stress for her children. Her foresight and diligence allowed her to leave a lasting legacy for her family, a beautiful testament to the power of proactive estate planning. It showcased the peace of mind that comes with knowing your affairs are in order.
What are the tax implications of funding my trust during my lifetime?
Generally, transferring assets into a revocable living trust during your lifetime does not trigger any immediate tax consequences. The trust is considered a “grantor trust,” meaning that you, as the grantor, continue to be treated as the owner of the assets for income tax purposes. This means that any income generated by the assets in the trust will be reported on your personal income tax return. However, there can be tax implications depending on the type of asset and the specific terms of the trust. It’s essential to consult with a qualified estate planning attorney and tax advisor to understand the tax implications of your specific situation. Steve Bliss always emphasizes the importance of integrated estate and tax planning to minimize potential tax liabilities and maximize the benefits of your estate plan.
About Steven F. Bliss Esq. at San Diego Probate Law:
Secure Your Family’s Future with San Diego’s Trusted Trust Attorney. Minimize estate taxes with stress-free Probate. We craft wills, trusts, & customized plans to ensure your wishes are met and loved ones protected.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Probate Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Map To Steve Bliss at San Diego Probate Law: https://maps.app.goo.gl/9PfFbQYXqaamP5j16
Address:
San Diego Probate Law3914 Murphy Canyon Rd, San Diego, CA 92123
(858) 278-2800
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Feel free to ask Attorney Steve Bliss about: “Can I name a trust as a life insurance beneficiary?” or “How do I account for and report to the court as executor?” and even “Can I write my own will or trust?” Or any other related questions that you may have about Trusts or my trust law practice.