I like to establish a three phase process with my estate planning clients. The first phase is the gathering and drafting phase. This phase includes meeting with my clients to discuss their needs. I then draft the estate planning documents. Phase two is the execution phase. This is where my clients meet with me to learn about their documents and execute their documents. The final phase is phase three this is the funding phase. This phase typically takes the longest to complete, but is essential.
Let’s imagine it is in the middle of fire season. Your community has been hit by fires before, and you have a funny feeling that this may be the year your community is hit again. So, you decide to purchase the best fire proof safe. This puppy can withstand the hottest fire ever. You made sure it was large enough to fit all your photos, jewelry, artwork, important papers and mementos. The big day arrives and your safe is delivered. The company shows you how to use your safe and walks you through the mechanics of the lock. Handing over a pretty hefty check you bid farewell to the delivery team and head to the garage to admire your new safe. The garage seemed to be the best spot to put your safe. It was more protected as well as hidden, the perfect spot. Days go by and then weeks. You forget you have a safe, since it isn’t very visible. Also, you still have not put any of the things you wanted to protect in your safe. One day a big fire hits your community and wipes out many homes including yours. As you sift through the rubble you see the safe. It is a little dusty, but in good shape. You open the safe and the inside looks brand new, but it is empty. You forgot to put any of your things into the safe so they burned in the fire.
A trust functions the same way. A trust is a great way to avoid a probate, but it only works if you fund your assets into the trust. You need to make sure your bank accounts are retitled in your name as trustee; your deed is retitled to reflect you own the property as trustees, beneficiary designation forms need to be updated. Once you create a trust you need to take the final step of funding the trust, by transferring titled into your name as trustee. If you miss that step your trust is simply very expensive paper.