Funding Your Trust

Once you have created a trust, it’s important that you “fund” it. Funding the trust essentially means that you transfer ownership of your assets into the name of the trust. Instead of your name being on the account, it’s your name as trustee of the trust on the account. 

For example: the checking account of Joan Johnson becomes the checking account of Joan Johnson, trustee of the Johnson Living Trust, dated March 3, 2020. 

It is critical to fund your trust to avoid the time, expense, and public nature of probate. And to have a plan in place if an unexpected crisis arises. Having a trust unto itself doesn’t help you achieve that end; you have to get your assets into the name of the trust for the trust to be effective. Ideally, everything you own, besides your retirement accounts, is typically transferred into a living trust. If you don’t put your assets (like your house) into your trust, then your estate may still go through probate!

When we set up a trust for you, we provide you with complete funding instruction to address each type of asset and how to move it into the name of the trust. And if any questions arise, we welcome our clients to call us with any questions.

An Ambiguous Disposition: Right of Survivorship on Bank Accounts

Late in 2019, the California Court of Appeal issued a decision (Placencia v Strazicich) which impacts people with beneficiaries on bank accounts. 

In the case, Ralph Placencia had a joint bank account that had an express right of survivorship in favor of one of his daughters. However, before he died, Ralph left a will stating that he wanted the proceeds of the bank account to go to all three of his daughters (not just the one whose name was jointly on his account). 

The conflict between the beneficiary designation and Ralph’s will lead to litigation. After analyzing the law, the court determined that a will, in and of itself, cannot render a beneficiary designation ineffective. However, the court did allow for a very limited circumstance where a decedent’s intent, shown by “clear and convincing” evidence, may invalidate a beneficiary designation. Even if that evidence is contained in statements made in a will. 

In other words: if you have a joint account with another person (e.g. a parent), the right of survivorship on the joint account is not absolute. Even though this court decision is very limited in scope, it does reinforce the principle that the right of survivorship will be determined by the decedent’s intent—which can be supported by statements made in a will, among other forms of evidence. 

Make your intentions clear. Almost every case dealing with an ambiguous gift will come down to the decedent’s intent.