If you don’t get the assets into the trust, you end up with an “unfunded” trust.
If an “unfunded” trust ends up being created because assets were not transferred, there are a number of things that can happen when the trust settlor passes away, according to the NWI Times in "Estate Planning: Unfunded Trust."
If there are no assets for the trustee to manage and distribute to the trust beneficiaries, as directed by the trust, the best case scenario is that the deceased did create a will providing that any assets in the estate be placed into the trust. This is called a pour over will.
As long as no one challenges the estate, then a probate judge will allow assets to be transferred to the trust and everything should proceed normally from there. However, things can get very messy. if there is no will or a non-pour over will.
Under those circumstances, getting assets into the trust can be very difficult, if not impossible.
The best thing to do is to avoid this problem.
After getting a trust, make sure that you fund it.
An estate planning attorney can advise you in creating an estate plan that fits your unique circumstances and can also help you through the process of funding a trust.
All trusts drafted by the attorneys of Legacy Counsellors, P.C. are fully funded; this is not true of all estate planning firms. Unless your trust is funded properly, it is ineffective. Please contact us today if you would like to create an estate plan or want to have your estate plan reviewed and updated.
Reference: NWI Times (May 7, 2017) "Estate Planning: Unfunded Trust."