Even when you use a trust as your primary estate planning document, you still need a basic will. It tells a court that you intend for all of your assets to be governed by the terms of your trust. Many people call this kind of will a “pour over will” because it pours all of your assets into your trust in case for some reason, any of your assets that should have been titled to your trust were owned individually at your passing.
You Need a Will Even If You Have a Trust.
There are reasons for this. Some government entities look for instructions in your will. For example, if your will contains a specific instruction about your motor vehicles, then changing title to them is an easy process. Without a specific instruction, the Department of Motor Vehicles may not change title without a court order.
Also, if any of your assets are left outside the trust, they will pass according to the instructions in your will. A pour-over will helps make sure the terms of your trust govern the ultimate distribution of your assets.
“Funding” Your Trust Is Crucial.
By now, you should understand that transferring your assets to the trustee of your trust is crucial. This process is called “funding” your trust. The funding process is easy to understand, but it will take some effort on your part to complete the process.
When you fund an asset to your trust, you make sure that everyone knows the trustee owns the asset. For example, I want the county to know that the trustee of my trust owns my house. If the county knows this, then, after I die, my successor trustee only has to let the county know that he has taken over management of the trust. He can sell the property whenever it makes sense in light of the instructions in the trust. What happens if the county still thinks I own the property? They will expect my signature on all the paperwork regarding the house. Of course, after I die, I cannot sign any paperwork, and that means a court must issue an order telling the county who can sign on my behalf.
The same is true for bank accounts. The bank’s records tell the bank who can access the account. If my name is in the bank’s records, I will need to sign all the paperwork regarding the account. After I die, though, I cannot sign anything. Banks are very careful about this because they cannot let anyone else have my assets. If my name is in the bank’s records, no one else will be able to access my account until a court tells the bank what to do. But if the bank knows that the trustee of my trust can access the account, then my successor trustee only needs to show the bank that he has taken over management of the trust.
A general assignment of assets to your trust will show that you intend to transfer all appropriate assets to the trustee of the trust. But you cannot rely only on the general assignment. For each asset you have, you need to make sure that everyone involved with the asset knows that the trustee of your trust has control of the assets. After your trust is finalized, we will give you more specific instructions about how to fund your trust, but we want you to understand from the start that monitoring title of your assets will be one of your most important jobs after your trust has been created. We’ve found that the vast majority of clients don’t devote the necessary time/attention/focus to this on a year-to-year basis. As a result, we made asset alignment one of the cornerstones of our Legacy Program – through which Kaiser Law Group proactively ensures that our clients’ plans will work to take care of their loved ones when it counts.
Sometimes no matter how hard you try, an asset gets overlooked and isn’t transferred to a trust. Fortunately, the rules in California recognize these oversights. After you die, the trustee of your trust can claim a limited amount of assets without a court order. Only $166,000 worth of assets can be claimed this way. As a result, you should review title to your assets regularly after your trust has been created.
Your pour-over will in addition to other evidence of your intent to title your assets to your trust (e.g. a schedule of intended trust assets – sometimes referred to as Schedule “A”) can be used as the basis for a Heggstad petition that we can file to ask the court to treat assets valued at over $166,000 as if they had been properly titled to your trust.