ADVERTISING - ADVERTORIAL: Five things people forget to do after creating a living trust

You signed the documents, felt a wave of relief, and tucked your new living trust into a filing cabinet. You're done, right?

Not quite. A living trust is a powerful estate planning tool, but it only works if you take a few critical steps after signing. Unfortunately, too many Idaho families skip these steps — and their loved ones end up dealing with headaches the trust was designed to avoid.

Here are five commonly overlooked tasks that can make or break your living trust.

1. Funding the Trust

This is by far the most common mistake, and it's a big one. "Funding" simply means transferring your assets into the trust so that the trust actually owns those assets. A living trust without funded assets is like a safe with nothing inside it.

For Idaho homeowners, this typically means recording a new deed that transfers your real property from your individual name into the name of the trust. Bank accounts, investment accounts, and other titled assets also need to be retitled, or must have death beneficiaries listed with the financial institution. If an asset is still in your personal name when you pass away, and it does not have a death designated beneficiary — that asset is likely subject to probate court proceedings.

2. Updating Beneficiary Designations

Retirement accounts, life insurance policies, and certain bank accounts can pass by beneficiary designation, and consequently do not need to be part of your trust. Many people create a trust and assume it terms control everything, but these beneficiary designations override everything else. So, if you have a trust that says everything goes to Johny when you die, but you have an IRA that names Sally as your death beneficiary, Sally will get the IRA regardless of what the trust says.

Take the time to review every beneficiary designation and make sure it aligns with your overall estate plan. Sometimes, naming the trust as a beneficiary of retirement or life insurance makes sense — yes, you can name your trust as a death beneficiary instead of an individual. In some situations, naming individuals directly is the better approach. An experienced estate planning attorney can help you understand important considerations about taxes and asset protection to help you determine the right strategy for your situation.

3. Keeping the Trust Updated After Major Life Changes

Life doesn't stand still after you sign your trust. Marriages, divorces, births, deaths, significant changes in assets, a move to or from Idaho — all of these can affect whether your trust still does what you intended.

Idaho law has its own rules around community property, homestead exemptions, and spousal protections. If your circumstances change, your trust may need to be amended to keep up. A good rule of thumb is to review your estate plan every three to five years, or whenever a major life event occurs. Don’t hesitate to ask your attorney to meet with you to discuss whether updates are in order.

4. Telling Your Successor Trustee Where to Find Everything

Your successor trustee is the person who steps in to manage the trust if you become incapacitated or after you pass away. But even the most capable trustee can't do their job if they don't know the trust exists or where to find it.

Make sure your successor trustee knows where your original trust document is stored, along with deeds, account statements, insurance policies, and any amendments. You don't need to share every financial detail right now, but they should at least know where to look when the time comes. A simple letter of instructions stored with your trust documents can save your family significant time and stress — and don’t forget to include relevant account login and password info.

5. Coordinating Your Trust with Your Other Estate Planning Documents

A living trust doesn't replace the need for a durable power of attorney, a healthcare power of attorney, advanced medical directives, or funeral planning. These documents work together as a team. Your durable power of attorney gives someone authority to handle financial matters outside the trust. Your healthcare directive addresses medical decisions.

If these documents contradict each other or weren't drafted to work alongside your trust, gaps and confusion can follow. Make sure all of your estate planning documents are coordinated and up to date.

Don't Let Your Trust Collect Dust

Creating a living trust is a smart step for many Idaho families, but the work doesn't end at the signing table. Taking the time to fund your trust, align your beneficiary designations, plan for life changes, communicate with your trustee, and coordinate your documents can mean the difference between a smooth transition for your family and a costly, time-consuming legal process.

My law firm is currently offering free telephonic, electronic, or in-person consultations concerning probating estates or creating estate planning documents.

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Robert J. Green is an Elder Law, Trust, Estate, & Guardianship Attorney and the owner of Kootenai Law Group, PLLC in Coeur d’Alene. If you have questions about estate planning, probates, wills, trusts, powers of attorney, guardianships, Medicaid planning, or VA Benefit planning, contact Kootenai Law at 208-765-6555, [email protected], or visit www.KootenaiLaw.com.

This has been presented as general information and not as legal advice. Do not engage in legal decision-making without the advice of a competent attorney after discussion of your specific circumstances.