ESTATE PLANNING: Mom didn't fund the trust

2014-01-18T12:03:00Z ESTATE PLANNING: Mom didn't fund the trustChristopher W. Yugo Times Business Columnist
January 18, 2014 12:03 pm  • 

Q: My mother has a revocable trust and I am now the trustee. It looks like the house is in the trust but nothing else. Shouldn't she have put everything into the trust? How do I get the assets into the name of the trust now?

A: I'm going to make a big assumption here and assume that your mother is still alive. If she has passed and she was the only settlor, chances are the trust is now irrevocable and you will likely need to handle it through the probate process, either formal or informal.

If she has passed, look for the pour over will and contact the attorney.

If your mom is alive and she hasn't funded the trust, don't be too surprised. It happens a lot.

Failing to fund a trust is a common mistake folks make. I'm not sure why, but I see it all of the time. A settlor spends a lot of money creating a trust but fails to take the next step by funding it.

Remember that trusts only control assets that they have title to. The trustee does not have control over assets that are titled in another's name. A person can spend a pile of money on one of these things, but if it isn't funded, it's just a big binder full of paper. On the bright side, I've heard that trust binders make a good doorstop.

It's easy to fund the trust if you mother is able to assist in the funding. Essentially, she is going to need to sign a lot of paper and put it in front of the proper people.

The attorney has likely transferred title to the home and the personal effects when your mother executed the estate plan. Chances are he or she had your mother sign a deed in trust and a personal property assignment or bill of sale at the trust signing. It's up to her to contact the banks and brokers to put the other assets into the trust. That means phone calls and visits to your friendly neighborhood banker. Not a difficult process, just time consuming.

It's a little more difficult if your mom can't assist with the funding. In that case, someone needs to fund the assets for her. Hopefully, your mother has executed a power of attorney or a special limited power of attorney which grants the attorney in fact the authority to fund a trust. If that's the case, funding will be a little more difficult but is still a fairly straightforward process.

If your mother can't help and there isn't a power of attorney, I would contact the attorney to determine what options are available. Unfortunately, the options may include a guardianship which can be expensive.

Opinions are solely the writer's. Christopher W. Yugo is a Crown Point attorney. Address questions to Yugo in care of The Times, 601 W. 45th Ave., Munster, IN, 46321 or to Yugo's information is meant to be general in nature. Specific legal, tax, or insurance questions should be referred to your attorney, accountant or estate-planning specialist.

Copyright 2014 All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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