Avoid This Common But Fatal Trust Planning Error

It seems logical that if you go to all the trouble and expense of planning a trust, you would certainly remember to fund it. However, this is a common mistake people make. Signing a trust document does not by itself transfer every asset into the trust. Funding should be coordinated asset by asset with your attorney; the appropriate steps depend on the property, its ownership and any beneficiary designation. Source: RCW 11.98.008.

A trustee administers property held in the trust under its terms and applicable law. If you discover that an intended asset may not be in the trust, review its ownership and transfer documents with the attorney before deciding how to address it. Source: RCW 11.98.070.

Trust Funding During the Settlor’s Lifetime

If the settlor is still alive, the appropriate funding steps may include working with the relevant banks or brokers and preparing deeds or other transfer documents. The process and its complexity depend on the assets and circumstances. Review the needed steps with the attorney handling the plan. Source: Real estate conveyances: RCW 64.04.010.

Assets Left Outside a Trust After Death

If the settlor has died, assets left outside the trust may need probate administration, but that is not automatic. Some assets pass through a valid nonprobate transfer, and qualifying personal property may be collected using Washington’s small-estate affidavit procedure. An attorney can review the asset ownership, beneficiary designations and estate documents to identify the appropriate process. Sources: RCW 11.02.005(14); RCW 11.62.010.

Power of Attorney and Trust Funding

This issue underscores why it’s so important to have a will, a Power of Attorney and to check and recheck your estate plan. During your lifetime, an agent acting under a power of attorney may be able to help fund your trust, depending on the document and applicable law. An agent needs express authority to create, amend, revoke or terminate a living trust, subject to other applicable restrictions. Washington law permits a limited category of transfers without a specific grant of trust authority: transfers to a trust that benefits you alone and whose distribution provisions do not differ from those that would otherwise govern the property. Your attorney should review whether a proposed transfer qualifies. A power of attorney ends at your death. Sources: RCW 11.125.240(1)(a), (2); RCW 11.125.100(1)(a).

Over the past 34 years, the Law Offices of Christopher A. Benson has helped clients with estate planning. Contact our Federal Way office for a free initial consultation to discuss your goals and planning options.

With a little bit of planning, we can help you save a lot of time, money and aggravation while at the same time accomplishing your planning goals.