Planning Isn't Over When You Sign Your Trust Documents
Jennifer Sawday's recent post on her California Estate Planning blog in which she addresses why you do NOT want to put your retirement plan into your revocable trust provides an opportunity to consider two of the most significant mistakes that folks make when completing their estate plans. First, many fail to fund their revocable trusts. It is not enought to simply sign your trust documents. You've got to actually transfer assets into the trust. This is called funding the trust, and if this critical step is not completed, the trust will serve no purpose whatsoever, in terms of avoiding probate, allowing for flexible disability planning or anything else. Second, the trust needs to be not only funded, but properly funded. This step involves assuring that you transfer to the trust those assets that are best situated there, and leaving outside of the trust those assets that can provide you with more flexibility and tax or financial benefit by staying out of the trust. In many circumstances, as Jennifer notes, retirement accounts are best left out of the trust. Your attorney can, and should, assist you with these processes, as can your accountant. Don't get caught short - be sure that your advisers help you complete the process and have your trust properly funded.
