If you have started exploring your estate planning options, you may have come across “trust funding San Diego”. In our experience, many clients are unsure about how this term relates to trusts. In this post we will present you the basic information about trust funding, but please note that this text is not legal advice, and should not be construed as such. If, after reading this, you still have questions and doubts, we invite you to share them with us in a free 30-minute consultation in which we can address the particularities of your case. Don’t hesitate to book your case review right away!

What is revocable living trust?

A revocable living trust is a common estate planning document, which can prove an excellent tool of preserving estate and avoiding probate. The trust is a legal entity and not an account. It puts your assets on hold for your beneficiaries, to be distributed in a specified manner by a trustee after your death.

Let’s focus on these modifiers – living and revocable. When we say living trust, it means that the person who sets up the trust and contributes to the trust’s contents (the settlor) is also the person in charge of the trust (the trustee) during his or her lifetime. Revocable refers to the fact that the trust can be changed during the grantor’s life, but becomes unchangeable or irrevocable upon the grantor’s death.

What then is trust funding San Diego?

Many people think that you just set up a revocable living trust and that’s it. This is not enough. You have to title your personal assets into your trust. Only those assets which are contained in the trust will avoid probate. Titling real property into the trust can be done through a grant deed. Changing the title to bank and brokerage accounts is done during a meeting with a banker or a broker. Since the settlor and the trustee are one and the same person during the settlor’s life, there will be no real difference for the settlor.

What happens when a trust remains unfunded or partially funded?

When a person dies, their personal assets (assets titled in their name) will go through probate if those assets are valued at greater than $150,000. Even if you have a will in which you give directions as to how your property should be distributed, it will still require a probate. Trusts allow you to avoid probate, but only if they are properly and fully funded.

Unfortunately, it is common that the settlor dies before completing the transfer of all of their assets into the trust, and so when the trust becomes irrevocable, it is only partially funded. This is when beneficiaries can leverage the Heggstad petition, codified in the Probate Code section 850(a)(3). If some property is listed on Schedule A of the trust, but hasn’t been actually transferred into the trust, this petition could remedy the situation. Since the settlor listed the property on Schedule A, it clearly shows their intention to include it in the trust, even though they failed to actually transfer it.

However, every situation has to be reviewed on its own merits. Heggstad petition is not available in all cases.

Trust funding San Diego is our specialty – feel free to consult us

The Law Offices of Irina Sherbak specialize in estate planning. If you have questions related to wills, trusts, power of attorney for finances or power of attorney for healthcare and anything else related to estate planning, don’t hesitate to book your free 30-min consult with a knowledgeable and experienced legal professional. Bilingual in English and Russian and top-rated on review sites like Yelp, the Law Offices of Irina Sherbak put their expertise at your service!