Just wanted to say all this info is so, so interesting and helpful. A strong reminder to get all this figured out. Sounds like checking the beneficiaries can be a first, easy step, then thinking about setting up trust.
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It sounds so crazy, but setting up a trust and then thinking youâre done, not taking that step to fund it is a thing. I advised a sibling to put their RE into a trust and discovered a decade later they had created the trust, but they failed to fund it, luckily they were still alive and have been struggling in the covid restrictions to get it done. (Fear of leaving the house + government offices closed + confused by the actual process of how to do the deeds.)
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Three things that keep attorneys employed that shouldnât:
Fixing bad estate plans
Fixing estate plans that werenât funded
Fixing estate plans that were ignored when someone died
Fun fact: malpractice insurance for estate planners is the most expensive kind for all attorneys.
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You should also review your estate docs regularly to ensure that the addresses/contact info of all parties named in all of the docs are current.
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What do yâall mean by funding the trust? Iâve never heard of that.
The rule of thumb is review every 5 years and after any major life event. And if there is a change in tax law. Keep addresses current separately, but you shouldnât have to pay an attorney to amend every time someone moves. The docs have to just adequately identify people. Happens all the time that a name or address changes. i can deal with that.
Funding a trust means transferring bank accounts, real estate into it. Otherwise it is an empty bucket.
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Can you buy real estate directly into a trust? How does the mortgage work?
Our attorney does not charge us for small amendments like this. We review annually, but the five-year rule is sound, and I would think that any fees for small modifications done at that interval would not be significant or burdensome.
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Now, I understand. Yes, I think thatâs helpful. I thought you were saying to use a lawyer recommended by the FA.
Oh, that never occurred to me, that someone could create an âemptyâ trust. I assumed moving things into it was part of the whole process of creating it. Thanks.
Yes, this is critical. We had a friend die of leukemia at 30. His wife of about 1 year and his mother despised each other. When he passed, the large life insurance policy was delivered to the beneficiary of record. No one knew for three days until the mail arrived who that was. He worked for a large American company but had been registered in both the US and a South American country (of his birth).
This is not what anyone should wish for.
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Excellent question! Short answer: it depends. Used to be that you had to take the real estate out of a trust for a refi for example, and then put it back in. Which people regularly forget to do. The rationale behind it is that the mortgage is with a person, not a trust.
I have seen it done in the past few years that the mortgage co did it with the trust. So it happens.
But no way am I going to give advice across state lines about this little nuance. 
If you are buying or refi-ing - tell the title company you want the property in your trust, and read the deed(s) before you sign to make sure they did it right. Ask questions.
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True story. My dad set up a trust and the lawyer told him to put EVERYTHING in it. A few months after dadâs death, I called the attorney who set it up and the first thing he said was (after condolences and how great the obituary was): I have the instructions here for your dad, did he do what I told him to do? Me: No, but he told me blah blah blah. Attorney: He should have completedly transferred everything, that was my advice.
My only lesson is to learn how to do my estate in the manner I wish and to communicate everything to my kids so that are not befuddled.
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It means for instance if you have a brokerage account that is still in the name of John Smith, it should be transferred into the name of the Trust. Thatâs what it is called by funding it. So the Trust owns the assets, not John Smith. John Smith however is the Trustee of his own Trust so he controls the assets.
So for instance, since I own my house, after my divorce my house went into my Trust. If my current husband owned it with me, then it would be TBE instead, but he doesnât so it remains in my Trust. All of my assets are in the Trust as well except my every day checking accounts. My IRAâs are held personally my me but the beneficiaries are the Trust since they have to be held that way etc. Investments I make are always in the name of the Trust.
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I just refinanced a condo I own in my trust. It is still in the name of the trust, the mortgage goes in my personal name. The important thing is how the title of the property is held and thatâs in the Trust. This is in Las Vegas so yes it could be that each state is different. I recall they were originally hassling me because Iâm married and Nevada is a community property state and wanted my husband to sign off on something however, once they saw the quit claim deed that the property owns the Trust and not me personally, it was no longer required for my husband to sign anything. It was a pain in the neck and would only have created more fees.
It could differ from state to state, but in the west, your house is in the trust when your deed is put into the name of the trust, often with a quit claim deed to transfer the existing real estate.
Funding the trust really means renaming things so they are vested in the name of the trust:
âThe You Donât Say family trustâ created MM/DD/YYYY
You Donât Say, trustee
The advantage, as I have seen with a few parents dying, is not only no probate, but also no, or not much, hassle. The successor trustee provides documents that show them as successor, plus a death certificate, the bank/brokerage/county etc. change the name to be that person and poof, they can now deal with those assets. In our cases, each final parent had resigned before death making it even easier.
The spooky thing about trusts is amendments, when an entity asks for a copy of the trust they also ask for all the amendments, but if there was some family disharmony, a prior successor trustee who had been replaced could simply fail to provide that amendment and get away with shenanigans whilst others were unaware. (I may or may not read too many inheritance horror stories on BH & MMM forums 
)
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I have mentioned this here before, but it is worth repeating IMO: wills become public records, but trusts remain private. Some folks use a pour over will to flow all of their property into a trust after death. The distribution then happens according to the trust documents thus avoiding any dirty laundry being aired in public. When discussing pour over wills, some T&E law professors like to refer to this document. 
So do as Michael did (but avoid his mistakes); consult your local estate planning attorney regarding your personal situation!
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IANAL, but my understanding is that transferring ownership of a property with a mortgage into a trust can trigger the mortgage being due immediately. I donât know how often that happens in practice.
I had to Google IANAL!
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but note, stuff subject to the pour over will, i.e., not specifically named in the trust, still have to go thru probate in many states.
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