As we've discussed previously on this blog, the term Estate Planning can be a somewhat confusing term if taken without additional explanation. Estate Planning, in my mind, is approach we must all take to properly direct who will inherit our assets and whether they will inherit directly or in trust. It is also the process through which we nominate a person or persons to be in charge of everything from caring for minor children, managing our finances or making healthcare decisions while we are alive but unable, administering trusts, or administering the probate estate. The term itself does not describe whether a Will or a Revocable Living Trust is the main document in the plan. I will elaborate on that topic in the near future, but for the purposes of this post I want to discuss what may well be one of the most important steps in the estate planning process that tends to be overlooked.
The step I am referring to is where assets are transferred or retitled to the revocable living trust. The fact is that one of the reasons that the cost of a revocable trust based plan exceeds that of a will based plan is the additional work required to fully fund the trust. A revocable trust operates at its utmost efficiency and effectiveness when the attorney and the client work to retitle and fund the revocable trust during the client's lifetime. Accomplishing this step prior to death will keep the estate out of probate and ensure that the process is private and as seamless as possible. In the end the additional work up front will go a long way toward limiting administration expenses and eliminating many of the difficulties that families may face if the estate planning is not proactively addressed.
Over the next two weeks I will discuss the various "typical" asset classes that I see in my practice and the different ways to deal with those asset classes to maximize the effectiveness of a revocable living trust. As I publish those additional posts I will provide update links below.
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