Don’t Create Estate Plan and Forget to Fund Assets

Two women having a discussion and sharing information during a business meeting. Shallow depth of field.

An estate plan only works if it is properly funded.

After some careful thought and critical planning, you set up your estate plan. What is one of the most likely errors to occur next? You fail to fund the assets, according to The Farmer’s article “Funding assets to your estate plan.”

Funding is the process of titling assets, so that the estate plan and the assets are aligned. Each estate plan is different.  However, the funding process includes tasks such as changing ownership on accounts, establishing beneficiary designations and transfer on death designations.

One common mistake: opening a joint checking account to cover funeral costs and then not funding the account. For estate plan wishes to be carried out, accounts need to be funded.

After death, a will is reviewed by a probate court and assets included in the will are managed and distributed by the executor, who is sometimes also known as a personal representative.

If your assets have been placed in a revocable trust, the trust names a trustee who manages and distributes after your death. You need to make sure the ownership and beneficiary designations for all assets are correctly named. These include relatively common financial tools like checking and savings accounts, CDs, bonds, stocks, life insurance policies, real estate, investment accounts and any business interests.

Some accounts should not be in a trust, such as retirement accounts and incentive stock options. An estate planning attorney will be able to help you determine what accounts should be held in a trust and which should not be.

In addition to wills and revocable trusts, some estate plans incorporate joint ownership and transfer on death designations.

An estate planning can advise you on creating an estate plan that fits your unique circumstances, as well as make sure the assets and estate plan are aligned.

Reference: The Farmer (March 16, 2018) “Funding assets to your estate plan”