DELGALLO.com WEALTH MANAGEMENT ESSENTIALS – Revocable Trust Funding Requirements
By LEONARD J. DEL GALLO JR., M.S., MPASsm, CFP®
(www.DELGALLO.COM) Del Gallo Financial Services, LLC
According to Asperti and Peterson, some states require assets or a small cash amount to be placed in the revocable trust during the individual’s lifetime for a revocable trust to be considered a valid trust under certain state laws upon death although many states consider a revocable trust valid solely by its mere creation. Asperti and Peterson explain that if the trust maker dies without transferring property and assets into the revocable trust then the property and assets may have to go through the probate process before entering into the trust if the trust is deemed valid. A revocable trust is generally set up to avoid probate therefore not funding it defeats a primary reason for establishing the document. In a case with an unfunded revocable trust, upon the settlor’s death, a public record of the estate proceedings will show the assets going through probate and distributed to the trustee of the trust when there is a valid unfunded revocable trust. If a revocable trust is funded prior to the settler’s death, the assets within the trust do not pass under the settlor’s will or go through probate. Asperti and Peterson add that an estate plan using an unfunded revocable trust without an established pour-over will can have funding issues during the probate process. Generally, an individual would want to have a pour-over will if they are not funding the revocable trust to facilitate the transfer of assets into the trust upon death. Even with a funded revocable trust it is very likely that the deceased individual will have some assets that are not held within the revocable trust that will have to go through the probate process where a will could be beneficial.
Any questions please contact Del Gallo Financial Services, LLC by visiting our website at https://delgallo.com/. Del Gallo Financial Services, LLC can arrange an educational seminar or workshop for your organization’s members and/or employees. This research commentary is intended to educate families so they may gain an introduction to a difficult planning topic and is not intended for any other purpose. Articles created by Len Del Gallo Jr., may not be copied or used without written permission from Len Del Gallo Jr.. Del Gallo Financial Services, LLC and its’ representatives do not provide tax or legal advice. Please consult your tax advisor or attorney for guidance on such matters and before implementing any strategies and/or updates to your planning. Del Gallo Financial Services, LLC is a Registered Investment Advisor and Licensed Insurance Agency.
Esperti, Robert A., and Renno L. Peterson. Protect Your Estate. 2nd ed. New York:
McGraw-Hill, 2000. Print.
Leonard J. Del Gallo Jr., Broker Associate in Connecticut & Florida
CT Managing Broker: Berkshire Hathaway HomeServices N.E. Properties
Office: 172 West Main Street
Avon, Ct. 06001
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