Baron Law LLC, Cleveland, Ohio, offers information for you to reflect upon while you are setting out looking for an estate planning attorney to help protect as much of your assets as you can. For more comprehensive information contact Baron Law Cleveland to draft your comprehensive estate plan to endeavor to keep more of your assets for your heirs and not hand them over to the government by way of taxes.
Trusts are one of the most practical estate planning tools. They possess the ability to do a multitude of useful and advantageous things in regards to estate planning. They protect trust assets against creditors, avoid probate, and guarantee assets go to where they’re supposed to after death to name only a few. Picking what type of trust or trusts are right for your estate planning needs then having your attorney draft the legal documents to make the trust is only the first step and not the most important one.
The most critical step is funding your trust. Picking the type and number of trusts is the easy part. The hardest part, and the one most often overlooked, is properly funding a trust. More often than not, people think after signing the papers and leaving the lawyer’s office the work is done. This simply isn’t true. Any trust without proper funding isn’t worth the paper it’s printed on and any attorney that allows you to leave his office without helping you plan for funding isn’t worth his fee. That is why retaining and working with an experienced Ohio estate planning attorney is so important, the attorney you choose, hopefully, will be by your side and working with you and your other advisers to make sure your trusts are operating to their maximum potential.
I. What does funding a trust mean?
Funding a trust is the process of transferring and re-titling certain assets in the trusts name, or, for those assets conveyed via beneficiary designation, naming the trust as the primary or contingent beneficiary. Re-titling assets in the name of your trust is a simple as going down to the county recorder’s office and physically changing the title from your individual name, or as is the usual case with couples, joint names, to the name of the trust.
This is one of reasons estate attorneys counsel their clients to be sure they are using the correct name of their trust. If you make a mistake and put down an approximate name instead of the exact name, most likely the error won’t be caught until the event which triggers the transfer of the relevant asset occurs. At that point, you’ll likely won’t be around and your trustee will have to spend a lot of time, effort, and trust money fixing the issue. Moreover, since the asset was titled improperly, i.e. to an nonexistent trust, it is likely the asset in question won’t benefit from the asset protection that comes with being a trust asset. Without asset protection, the asset may become vulnerable to creditor claims and litigation that otherwise it should have been protected from. Further, your trustee will likely have to seek court intervention to argue that the asset should really be in the trust and not go through probate. Again, costing time, labor, and, most importantly, your money. This is why a diligent and experienced Cleveland estate planning attorney is a must, they will dot your i’s and cross your t’s, preventing problems before they start.
Though funding your trust, facially, looks relatively straight forward, it always isn’t so. The transferring and/or re-titling of assets to your trust can have unexpected consequences that most people are unaware of. For example, re-titling an IRA from your name to the trust’s name can create a taxable event and may even trigger earlier distribution penalties in certain circumstances leading to a massive loss of your principal amount. Again, always have either your financial adviser, CPA, or estate attorney double check with what and how you are funding your trust, it is what you’re paying them for anyways.
II. Why is funding a trust important?
In a nutshell, the purpose of funding your trust is to guarantee the that property governed by the terms of the trust are actually owned by the trust and thus subject to such terms and the directives placed upon the trustee and trust assets. Failure to properly fund your trust essentially makes the trust agreement a paper tiger and wastes all the benefits associated with your trust and the work that went into making it. A gun without bullets is a piece of metal, a trust without assets is paper.
Failure to fund your trust may result in one or more of the following:
Assets outside of your trust are not subject to the terms of the trust. As such, your named trustee cannot carry out your trust instructions in regards to such property.
Assets outside of your trust may be subject to probate.
Assets outside of your trust may not go to intended beneficiaries, i.e. such assets may be subject to dispensation according to intestate law, elective share, or third-party claims such as creditors or litigants.
Assets outside of your trust, depending on the type of trust, may not receive preferable tax treatment.
III. How do I fund my trust?
The actual process of funding your trust is heavily dependent on what type of trust(s) you have, what you want your trust(s) to accomplish, and what assets are you going to place in the trust(s) now and further on down the road. Placing assets within your trust is accomplished generally three ways 1) changing title or ownership, 2) assigning ownership rights, or 3) changing a beneficiary designation.
Which method to use, for which asset, when to do it, and how to go about it should be a serious topic of conversation between you, your financial planner, and your Ohio estate planning attorney. Often funding a trust is left to the last possible moment and at that time, mistakes are more common. Mistakes mean lost money and missed opportunities. Since trusts at the fundamental level are nothing more than plans and instructions for the future use of your money and assets, easily avoidable mistakes like improper funding, or not funding at all, are inexcusable. Always take advantage of experienced Ohio estate planning attorneys to make sure your trust doesn’t end up an expensive but ineffectual stack of paper.
You don’t have to be rich to protect what you’ve spent a lifetime trying to build. To find out whether a trust is right for your family, take the one-minute questionnaire at www.DoIneedaTrust.com. There are a number of different trusts available and the choices are infinite. With every scenario, careful consideration of every trust planning strategy should be considered for the maximum asset protection and tax savings. For more information, you can contact Mike Benjamin of Baron Law LLC at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Mike can also be reached at email@example.com.
Helping You And Your Loved Ones Plan For The Future
About the author: Mike E. Benjamin, Esq.
Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at firstname.lastname@example.org.
The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.