Sand Hill's Chief Investment Officer, Brenda Vingiello, CFA, joins Jenny Harrington on “Halftime Report” to go over their most recent portfolio moves. Brenda's commentary begins
You Established a Trust! But Did You Properly Fund It?
Published Date : October 10, 2017
Many years ago, I was meeting with some new clients: a married couple in their 50’s with several million dollars in assets. They’d provided copies of their brokerage account statements for two IRAs and a joint account for me to review. I asked if they’d done any estate planning and they enthusiastically answered, “Yes!”, clearly very happy to have this task off their to-do list. After further questioning, I learned that they had indeed established a revocable living trust but the trust document had been merely stored at home in their locked filing cabinet. When I pointed out that their joint account should have been re-titled in the name of their trust, their faces fell. They had no idea that there was more work for them to do after establishing the trust beyond filing it in a safe place. The good news in this story is that they were both still alive and healthy and I could help them with completing this very important task.
Unfortunately, this scenario is all too common and these were not the only clients in my nearly twenty years at Sand Hill to have made some basic estate planning mistakes like this one. Once a trust is created, it must be fully funded to be effective. That means all assets that should be in the trust must be re-titled from individual or joint name into the name of the new trust. Some of the most common assets that should be considered for inclusion in your revocable living trust are below:
- All bank accounts
- All brokerage accounts
- All limited partnership investments
- All private company investments
- All real property: your primary residence and any vacation or rental homes
- All your cars
- The entire contents of your home
- All collectibles, artwork and jewelry
- All patents, royalties and trademarks
- Homeowner’s insurance policies should list the trust as a named insured
Admittedly, this task can be tedious and it requires patience for sure, but it is extremely important. And yet, before you set out to put everything in the name of your trust – including IRAs, life insurance policies and separate property assets – be sure to consult with your attorney. These and other assets might be better left outside of your revocable living trust since including them can create some unintended estate planning and taxation consequences. Your attorney can help to ensure that ownership and beneficiaries are designated appropriately.
Still, if, despite your best efforts and for whatever reason, your trust isn’t fully funded at your death, all your good estate planning work is not necessarily lost. Your attorney can still petition the court to get assets into the trust if there is proof that this was your intention. Indeed, you may have seen in the news recently that the trustee of celebrity Carrie Fisher’s estate was petitioning the court for this very reason. But as you can imagine, petitioning the court for anything is an extra step which costs time and money. It can also be a burden for the successor trustee who may be a grieving surviving spouse or child who was not a participant in the original drafting of the trust.
Even if you are certain that your trust was properly funded right after it was created, it is simply a best practice to review it periodically. Time passes often more quickly than you realize, and circumstances — and your balance sheet of assets — can change. Given the important nature of the exercise, it shouldn’t linger on your to-do list for too long.
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All video presentations discuss certain investment products and/or securities and are being provided for informational purposes only, and should not be considered, and is not, investment, financial planning, tax or legal advice; nor is it a recommendation to buy or sell any securities. Investing in securities involves varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular client’s financial situation or risk tolerance. Past performance is not a guarantee of future returns. Individual performance results will vary. The opinions expressed in the video reflect Sand Hill Global Advisor’s (“SHGA”) or Brenda Vingiello’s (as applicable) views as of the date of the video. Such views are subject to change at any point without notice. Any comments, opinions, or recommendations made by any host or other guest not affiliated with SHGA in this video do not necessarily reflect the views of SHGA, and non-SHGA persons appearing in this video do not fall under the supervisory purview of SHGA. You should not treat any opinion expressed by SHGA or Ms. Vingiello as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of general opinion. Nothing presented herein is or is intended to constitute investment advice, and no investment decision should be made based solely on any information provided on this video. There is a risk of loss from an investment in securities, including the risk of loss of principal. Neither SHGA nor Ms. Vingiello guarantees any specific outcome or profit. Any forward-looking statements or forecasts contained in the video are based on assumptions and actual results may vary from any such statements or forecasts. SHGA or one of its employees may have a position in the securities discussed and may purchase or sell such securities from time to time. Some of the information in this video has been obtained from third party sources. While SHGA believes such third-party information is reliable, SHGA does not guarantee its accuracy, timeliness or completeness. SHGA encourages you to consult with a professional financial advisor prior to making any investment decision.
Other Posts By This Author
- – Home Sweet RV
- – The Basics of Long-Term Care Insurance
- – Roth IRA Conversion: 2023 May Be Your Year
- – Do I Really Need a Trust to Avoid Probate?
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