You’ve Set Up a Trust – Now What? Your Essential Post-Setup Checklist

Congratulations! You’ve taken a significant step in protecting your assets and ensuring your loved ones’ futures by setting up a trust. But here’s the thing: setting up a trust is just the beginning. The real work begins after the ink is dry on your trust document. So, what’s next? How do you ensure your trust does what it’s designed to do?

This essential post-setup checklist will guide you through the steps you need to take to fund, maintain, and manage your trust effectively.

Why Setting Up a Trust is Just the First Step

Creating a trust—whether it’s a revocable living trust or an irrevocable trust—is a key part of your estate plan. A trust allows you to avoid probate, reduce taxes, and ensure your assets are distributed according to your wishes. However, a trust is only as effective as the steps you take to maintain it. Here’s why:

• Funding Your Trust: An unfunded trust is essentially an empty shell.
• Updating Beneficiaries: Changes in life (marriage, divorce, or new children) might require updates to your trust.
• Legal Compliance: Trusts must comply with state law, and requirements can vary.

Now, let’s dive into what you need to do next.

Step 1: Fund Your Trust

Your trust can’t work its magic unless you place assets into it. This process, called “funding your trust,” ensures your assets are legally owned by the trust. Here’s how to do it:

Transfer Ownership of Assets

• Real Estate: Update the title of your property to reflect the name of your trust.
• Bank Accounts and Savings Accounts: Notify your bank and retitle these accounts in the trust’s name.
• Retirement Accounts: While you can’t transfer ownership, you may need to update beneficiary designations to align with the trust.
• Life Insurance Policies: Update the beneficiary to the trust, ensuring proceeds are distributed according to its terms.

Common Mistakes to Avoid

• Forgetting to transfer smaller assets like personal valuables.
• Not updating the trust when acquiring new property or assets.

Step 2: Review and Update Beneficiaries

Does your trust still reflect your wishes? If your family has grown, or if circumstances have changed, now is the time to update your trust. For instance:

• A minor child may need a special needs trust.
• Beneficiary designations should match the terms of the trust.
• If you’ve divorced, update your documents to ensure your ex-spouse doesn’t inherit unintentionally.

Step 3: Assign a Successor Trustee

A trust is managed by a trustee. If something happens to you, who will step into that role?

• Successor Trustee’s Role: This person will administer the trust, distribute assets, and manage any remaining tasks. They may also need to handle tax filings, communicate with beneficiaries, and address any disputes that arise.
• Considerations: Choose someone you trust who is capable of handling financial responsibilities. It’s also wise to consider their availability, willingness to take on the role, and familiarity with your family’s dynamics. You may also name a backup trustee in case your first choice cannot serve.
• Professional Options: If you don’t have a suitable person in mind, a professional trustee, such as a bank or trust company, can step in to manage the trust impartially.

Step 4: Keep Your Trust Up to Date

Life changes. So should your trust. Regularly review your trust and estate planning documents to ensure they align with your current situation. Neglecting to update your trust could result in unintended beneficiaries or unnecessary legal complications.

When to Update Your Trust:

• Birth of a child or grandchild: Adding them as beneficiaries or setting up a special needs trust if necessary.
• Divorce or remarriage: Protect your assets and ensure they’re distributed according to your new circumstances.
• Changes in state law that affect your estate plan: For example, updates to tax laws or probate rules might require adjustments to your trust.
• Acquiring significant assets: Ensure any new property, investments, or accounts are included in the trust.

Step 5: Seek Professional Guidance

Administering a trust can be complex. State-specific laws, such as those in New York, can add another layer of complexity. For example:

• In New York, trusts must comply with specific provisions outlined in the New York Estates, Powers, and Trusts Law (EPTL).
• The probate process in New York can be time-consuming, but properly funding and managing your trust can help avoid probate and streamline the distribution of assets.

Consulting with a NY trusts attorney ensures your trust aligns with legal requirements and fully protects your assets. At Katz Law Firm, PLLC, located in Cedarhurst, NY, we specialize in creating and maintaining comprehensive estate plans to provide you with confidence and security.

FAQs About Trust Management

What happens if I don’t fund my trust?

If your trust isn’t funded, your assets may still go through probate—defeating one of the main benefits of having a trust.

Can I make changes to my trust?

If you have a revocable living trust, you can modify it at any time. An irrevocable trust, however, is far more restrictive.

What types of assets can’t be placed in a trust?

Certain assets, such as retirement accounts like IRAs and 401(k)s, cannot be directly transferred into a trust but may allow the trust to be named as a beneficiary.

How often should I review my trust?

It’s a good idea to review your trust every three to five years or whenever a major life event occurs, such as a marriage, divorce, birth, or death in the family.

Can a trust protect my assets from creditors?

An irrevocable trust can provide asset protection, as the assets in the trust are no longer considered part of your personal estate. However, revocable trusts do not offer this benefit since the grantor retains control over the assets.

Conclusion: Ensure Your Trust Works for You

Setting up a trust is a powerful step toward protecting your assets and providing for your loved ones. But don’t stop there. By funding your trust, keeping it updated, and working with professionals, you’ll ensure it serves its purpose—now and for years to come.

At Katz Law Firm, PLLC, we’re here to help you every step of the way. If you’ve created a trust and need guidance on what comes next, contact us today. Let’s work together to give you peace of mind and ensure your trust fulfills your wishes.