A reoccurring theme of many Posts is the importance of funding Revocable Trusts to avoid probate and balance the husband’s and wife’s assets for estate tax planning. More times than not, even those clients who go through the trouble of creating Revocable Trusts fail to fund the Trusts. The pour over Will transfers assets to the Trust, and the Trust then takes over. However, those assets passing from the Will to the Trust go through probate.
Probate is only avoided if the Trusts are created and funded. Part of any estate planning lawyer’s job is recommending how to fund the Trusts. For many clients, the primary assets are retirement plan assets, life insurance, and jointly owned assets such as the home, brokerage accounts, and bank accounts.
Generally speaking, the advice often includes the following:
- Retirement Plan Assets (e.g., IRA, 401k). Name each spouse as the primary beneficiary and each spouse’s respective Revocable Trust as the secondary beneficiary.