The Importance of a Revocable Living Trust
by JJ Childers
This week's Monday Morning Mentor Minute
Hello, JJ Childers here once again to be your Monday Morning Mentor. As my regular viewers will know, we’ve had several episodes on proper estate planning and particularly the importance of a revocable living trust. As we have learned, a revocable living trust is, like all trusts, an agreement whereby your personal wealth is held for the benefit of you and your spouse, and ultimately, for your heirs and beneficiaries. As we have also learned, the two biggest advantages of a living trust is that it prevents our estate from going to probate and it can eliminate, or at least reduce, estate taxes.
Yet when it comes to living trusts, there is one mistake which I have seen many people, including some attorneys, make more than any other. That is, they forget to fund the living trust. “Funding” a living trust means the process of changing ownership of an individual’s personal wealth out of their name and into the name of the living trust. Why is funding a trust so important? If a trust does not become the owner of the individual’s assets, the trust cannot operate to keep their estate out of probate nor will it help avoid or reduce estate taxes.
Stay tuned for next week’s episode, when I’ll give an over view of exactly how a trust is funded.
