Introduction: The Importance of Funding Your Trust

While signing your trust is a significant step in estate planning, it's just the beginning. A trust is effective only when it's properly funded with your assets. Without this crucial step, the trust serves no practical purpose. This article provides a comprehensive overview of which assets should be included in your trust, ensuring your estate planning efforts are fully realized.

Understanding Trusts: The Basics

A trust can be thought of as a safety deposit box, where you, the settlor, place your assets. These are managed by a trustee and eventually distributed to your designated beneficiaries. Funding your trust with assets is essential to avoid probate, a lengthy and often costly legal process.

Probate Triggers in California

In California, probate is triggered by two main factors: owning real estate and having a total estate value exceeding $184,500. These thresholds are critical in determining what needs to be funded into your trust.

Learn more: What Probate Means and How It Works | An Overview

Real Estate: A Must in Your Trust

All real estate, regardless of value, should be titled into your trust. Real estate not held in a trust necessitates court involvement, often leading to expensive and time-consuming probate processes.

Managing Cash and Financial Assets

For assets like checking and savings accounts, high-yield savings, money market accounts, CDs, and annuities, the approach varies. While keeping your checking account in your name is advisable, other accounts, especially those earning returns, should ideally be held in trust.

Brokerage, Retirement Accounts & life Insurances

Brokerage and investment accounts should be held in trust due to their potential value fluctuations. Retirement accounts and life insurances have unique rules. It's generally recommended to name your trust as a beneficiary to avoid probate.

Personal Property: A Strategic Approach

Personal property, unless of high value, is typically not included in a trust due to the complexities and costs involved in amending the trust. Instead, it's recommended to use a Letter of Instruction or a Pour-Over Will to handle such assets.

Learn more: Trust Myths Busted: Foreign Accounts & Jewelry! | Q&A #3

Learn more: Using a Will to Fund your Trust? The Pour-Over Will Explained

Closing Thoughts

Estate planning is crucial for everyone, not just the wealthy. It ensures your assets are managed according to your wishes and provides peace of mind for your loved ones.

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