What happens if I forget to put an asset in my trust?

Once you have your trust as part of your comprehensive estate plan, there are still a few things that must be done.

One of the steps that you must take after setting up a trust is getting your assets into the name of the trust. (Assets are bank accounts, houses, etc.) The process for doing that depends on the type of asset. (For example, you may need to go to the bank to ask them to retitle into the name of the trust; you may need to make the trust the beneficiary of your life insurance. Talk to your attorney if you have questions!)

What happens if you forget? You just didn’t do it, and then… you die.

As always, it depends. But there most likely there will be some form of a probate court proceeding.

There are two assumptions that I make in the following scenarios: 1) there is no beneficiary listed on that particular asset that is not in the trust; 2) the total value of all assets not in the trust is more than $184,500 (or, if it’s only a primary residence, it’s valued at more than $750,000).

Here are some common scenarios:

Scenario 1: The asset is listed on the Schedule of Assets that’s attached to your trust. In that case, your attorney might be able to file what’s called a “Heggstad petition” with the probate court. This tells the court that it was your intention that asset go into the trust. There are pretty strict requirements, depending on the court and this doesn’t work for everything, but in the circumstances it does, it involves about 6-9 months plus court fees. So it’s faster and less expensive than a full probate, but still involves some waiting and fees.

Scenario 2: The asset is not listed on the Schedule of Assets, but there’s a beneficiary! The beneficiary gets the asset (if they are alive), no problem. If the beneficiary has predeceased you, then…. see Scenario 4.

Scenario 3: The assets is not listed on the Schedule of Assets, but the total value of the assets that are not listed (and not in the name of the trust) is less than $184,500. Then you can do what’s called a Small Estate Affidavit that will transfer the title to the heir.

But what if that’s not who you wanted to receive it? Then you should have put it in your trust!

Scenario 4: The asset is not listed on the Schedule of Assets. Assuming that there is no beneficiary and the total value of all assets not in the trust are over $184,500, then we would have to go through a full probate proceeding for the assets not in the trust. This is about 18-24 months plus court fees and costs, which are based on a percentage of gross assets.

In other words: just having the trust is not enough. You have to make sure your assets are actually in the trust in order to both AVOID PROBATE and ENSURE THE PERSON YOU WANT TO RECEIVE THE ASSET actually receives it!

If you don’t know how to do that or have any questions, please contact me!