Trust Funding
There are lots of good reasons for creating a living trust -- such as probate avoidance, privacy, and control over when your property will be distributed -- but many of these reasons disappear if your living trust was not properly funded prior to your death. If I had to guess, I'd say that the single biggest misconception about living trusts is this: Once I execute a living trust, my estate will no longer require a probate. That's just not true.
Executing a living trust instrument is only the first step in creating an effective trust. Executing a living trust is like purchasing an empty bowl -- trust funding is the process of filling up the bowl, by making the trust the owner (or, in some cases, beneficiary) of your property.
One of the biggest impediments to trust funding is the fact that it's difficult to figure out who should be responsible for it.
The attorney?
The client?
The client's financial planner and/or accountant?
I think "all of the above" is the correct answer. I am happy to assist my clients in transferring their real estate into trust, by preparing the necessary deeds and other documents -- this is included in my (fixed) fee for estate planning. Furthermore, the attorney (together with the client's financial planner and/or accountant) should assist with the appropriate changes to beneficiary designations for retirement accounts. (Because of issues relating to income tax, changing beneficiary designations on these accounts can be a little tricky.)
However, it doesn't really make sense for an attorney to be involved in changing title to bank accounts and non-retirement investment accounts, or changing beneficiaries for insurance -- this isn't really legal work, and it can be fairly time-consuming (and, therefore, costly to the client). Furthermore, the client can make these transfers pretty easily, perhaps with the help of the client's financial planner. After a client of mine has executed his or her living trust, I send the client and his or her financial planner a lengthy letter (a) detailing the information I need to prepare the deeds for the client's real estate, and (b) describing, by type of property (CD, bank account, etc.), how other ownership and beneficiary designations should be changed.
The single most important aspect of trust funding is organization. This starts with listing all of the client's property, and ends with all such property being owned by the client's trust (or becoming payable to the trust at the client's death). Only when this has been done is the estate planning process really complete.
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