The Indisputable Case for Trust Funding & Estate Plan Maintenance
The work is not complete once trust documents are executed ─ it's just beginning!
Clients find it confusing that when you sign your trust, it's just the first step in proper estate planning. To ensure estate plans work as designed, trusts must be accurately "funded" and that funding must be maintained over time. Trust funding is the process of transferring assets to your trust by changing titles and/or beneficiary designations. Plan maintenance is the routine process of updating your trust estate plan to ensure it stays current with inevitable change in the law, finances, even family circumstances. Unfortunately, trust funding and plan maintenance are not subjects clients hear a lot about. In fact, most trust clients don't fully understand what trust funding is, much less why it's so risky to leave trusts unfunded or to attempt to fund them without their attorney's professional guidance. Historically, attorneys haven't done a good job in explaining why funding and plan maintenance are essential to reliable estate plans.
An unfunded trust is like a car with an empty gas tank: neither will get you where you need to go!
While trust funding is a critical component of successful estate plans, it's one of the least accomplished tasks. Why? Because trust funding is among the most complex and challenging tasks in estate planning. As important as trust funding is to clients and the success of their estate plans, it's surprising more attorneys don't help them with it. Fortunately, more estate planning attorneys are establishing full service firms to include professional trust funding, plan maintenance and updating, along with trust settlement services after death or disability.
Lack of adequate trust funding and maintenance is far too common.
A few trusts are inadequately funded with a few client assets. Too frequently, most trusts are never funded at all. Several factors contribute to this problem. Clients just don't understand how prudent and essential it is and they often are ill-equipped to accomplish it on their own. Most clients do not possess the legal expertise needed to fund living trusts accurately and completely. Some clients simply forget to fund their trusts as they should, lack the time to manage it, or think they will just get around to it someday. To make matters worse, many attorneys don't emphasize the importance of trust funding to the success of the estate plan and clients remain in the dark. Most attorneys who draft estate planning documents don't even offer the professional trust funding and maintenance assistance needed after the trust documents have been prepared and signed. Usually clients don't receive the education and support they need.
Deficiencies in trust funding and estate plan maintenance are preventable.
Neglect of funding and regular updating results in estate plans not working as intended and as clients expect. In short, most clients are surprised to discover that a lack of complete and proper funding can derail the very estate plan that they rely on. It seems like a strange paradox, but it's true! Sophisticated documents alone don't ensure a reliable estate plan. Shortcomings in the trust funding process cause most trusts to fail in achieving the very goals they were drafted to accomplish. The good news is - it doesn't have to be this way!
Funded trusts are worth the work and offer many of the best estate planning strategies.
Your trust plans are important to the well-being of you and your loved ones. Trusts can be unparalleled in achieving their objectives. Trust plans should not be avoided or neglected because they seem onerous or complex. Rather, the estate planning process needs to be reasonably managed and maintained like other types of planning. Most trust clients understand this inherent reality. Like sound financial or tax planning, it just makes sense to take care of the trust plan by funding it properly and updating it with time. Informed clients recognize that successful estate planning is more than believing things are taken care of just because they signed some legal documents, however fancy or costly they may seem. Sophisticated documents don't necessarily equate with reliable estate plans that work as designed. In short, elaborate documents are not enough.
Trust clients readily embrace trust funding and plan maintenance once they understand the need.
When attorneys properly explain the role of trust funding to clients (along with the risks of not doing it!), most clients are willing to invest the resources and dedicate themselves to the work that successful estate plans require. Clients, who are naturally devoted to the well-being of their loved ones enough to craft proper estate planning documents, demonstrate a strong commitment to plan updating and ongoing maintenance too. In fact, most clients readily embrace this sound approach over the alternative. It just makes sense!
Partnerships are key.
Establishing a long-term partnership with your estate planning attorney is vitally important. Because the legal complexities of trust funding impact greatly on the success of your estate plan, you should be realistic in your expectations of the trust funding process and seek professional guidance. Most clients (even other types of lawyers) typically lack the legal expertise to fund and maintain their estate plan accurately. Many estate planning attorneys now offer trust funding services and plan updating as part of their full service estate planning firms. If your estate planner does not offer these services or has not fully explained the importance of trust funding to you, please consult our Attorney Directory identifying estate planning professionals who practice, understand, and offer such important services.
There is no short-cut or magic bullet for effective trust planning or maintenance.
Funding your trust is sufficiently complicated and fraught with risk if not done properly. It can be laborious and cumbersome to coordinate, which is why experienced attorneys with estate planning backgrounds are best positioned to help. Trust funding needs to be tailored to the unique circumstances of each client, each family, and each estate. No one trust funding strategy is right for every client or every estate plan. More importantly, no one trust funding strategy is appropriate for every asset type or every legal jurisdiction. Each type of asset — whether real estate, retirement plan, life insurance, or bank accounts — has its own trust funding considerations unique to the characteristics of asset itself. The more education you have, the better the trust funding process will proceed. Without trust funding knowledge, it is possible inadvertently to commit a grave error that undermines the plan itself or that creates unwanted tax or legal consequences. In short, trust funding and maintenance is not for the uniformed. Your attorney and their professional team are your best funding and plan maintenance sources.
Your trust can be funded skillfully and will lower the total overall cost of your planning.
The good news is that, with some preparation and the guidance of a caring and conscientious attorney, your trust can be funded properly. A reliably funded trust lowers the overall costs of estate planning today and in the future. Talented estate planners around the country manage and fund thousands of trusts with a high degree of accuracy and success. Moreover, the investment you make in lifetime management of your estate plan pays big dividends to you and your loved ones. The administration of your trust after death should cost substantially less, flow more smoothly, and achieve your planning goals successfully. To neglect funding your trust or to fund it haphazardly will, in most circumstances, ensure the failure of your estate plan to meet its goals and increase the overall cost of your planning − no matter expensive or inexpensive your trust was, and regardless of how simple or complex your estate plan is.
Our trust funding and settlement software systems make these vital client services manageable and productive.
We help estate planning attorneys and their clients fund and maintain their estate plans during the lifetime with software systems, tools, and training. We have designed professional trust funding and trust settlement systems used by hundreds of estate planning attorneys throughout the country. Our systems help full service firms establish and facilitate these tasks with success. We can help you become more informed about the intricacies of trust funding and avoid pitfalls that can undermine the success of your plan. Beyond that, we identify skilled attorneys with experience in trust funding and estate plan maintenance, if you discover you need professional guidance or lack the time and expertise to complete the funding and plan maintenance.
Estate planning is not a one-time event − it must be maintained.
Remember that neither estate planning nor trust funding is a one-time event; if you expect to achieve the goals you established for the-well being of you and your loved ones, your plan must be kept current. That means not just funding your assets today, but also transferring newly acquired assets as your financial situation changes with time. An estate plan maintenance program can manage these important trust tasks as part of an overall approach to ongoing review and updating. Best of all, clients who participate in sound trust funding and estate plan maintenance activities report exceptional satisfaction with their estate planning process and great peace of mind.