If you have a living trust, one of your most important steps in making sure your plan works correctly when it is needed is to have all of your assets properly funded into your trust. And I Mean Everything.
Some of your financial assets need to be owned by your trust and others need to name your trust as the beneficiary. With your day-to-day checking and savings accounts, I always recommend that you own those accounts in the name of your trust. If you have questions about your situation such as which accounts should be owned by the trust and which should be a beneficiary, please call our office at (480) 418-8448.
Top Three Reasons Your Trust Should Own Your Accounts
- If you become incapacitated, or you and your spouse become incapacitated, that account will be frozen.
- If you pass away, that account can be frozen.
- If your accounts are in the name of an individual, they are much easier fodder for identity theft in the exploitation of vulnerable adults.
If you own your day-to-day checking and savings accounts in your trust, none of these things can happen. Arizona has one of the worst probate courts in the country for people who are incapacitated. Should that happen, all of your financial accounts and real estate holdings held in your name are very likely to be frozen.
This means no one in your family can access them and even if you have a power of attorney, there is no law in Arizona that requires any banks to honor it. And if they don’t, the only way for your family to get access to your accounts to pay your bills is to file a lawsuit against you called a conservatorship. This is a type of lawsuit that happens in probate court and can cost you thousands upon thousands of dollars, simply to pay your bills.
The Only Way To Guarantee No Conservatorship Is To Get Your Trust Right
“But I put my daughter on my account so she can pay bills if something happens to me.” That’s a common well-intentioned step that has serious disadvantages.
What happens if your daughter gets into a lawsuit? What happens if she needs to file for divorce from her husband? Or does her husband files for divorce against her? What happens if they go through financial troubles and have to file for bankruptcy?
Now, that account is now jointly owned with your daughter and those dollars look like her money. Any good lawyer on the opposing side is going to argue that it is hers and is now in the mix to be split or taken under these proposed circ*mstances.
When your trust owns your accounts, you are the one with the authority to write checks and pay bills while you are well. If you should become incapacitated, your trust gives your daughter immediate access to write checks if and when she needs to; banks do not dishonor the client’s wishes when a trust is used this way.
If you would like to talk about setting up a trust for yourself or a loved one, please call our office at,(480) 418-8448 and we will be happy to schedule an appointment. We offer services for clients throughout Arizona, including Chandler, Gilbert, Sun Lakes, Tempe, Phoenix, Mesa, Scottsdale, and Apache Junction.
Author:Francisco Sirvent - Keystone Law Firm
https://www.keystonelawfirm.com/
Author:Francisco Sirvent - Keystone Law Firm I graduated from the University of Arizona in 2001 with a B.S. in Biosystems Engineering, first in my class. I then entered the legal profession as a law clerk in 2002 and pursued a law degree at Arizona State University, completing the degree in 2006 as one of a handful of students who also obtained a Certificate in Law, Science and Technology. I led the Elder Law Pro Bono project and Christian Legal Society student chapters, and then interned at Arizona Technology Enterprises. I now run a law firm in Chandler Arizona dedicated to helping Arizonans with their Estate Planning, Probate and Family Law needs.
As an expert in estate planning, probate, and family law, I bring a wealth of knowledge and practical experience to shed light on the crucial topic of properly funding assets into a living trust. My credentials include graduating first in my class with a B.S. in Biosystems Engineering from the University of Arizona in 2001. Subsequently, I entered the legal profession, serving as a law clerk in 2002 and earning a law degree from Arizona State University in 2006. Notably, I was among the few students who obtained a Certificate in Law, Science, and Technology.
My journey continued with leadership roles in the Elder Law Pro Bono project and the Christian Legal Society student chapters. I further enriched my expertise through an internship at Arizona Technology Enterprises. Today, I operate a law firm in Chandler, Arizona—Keystone Law Firm—where I specialize in assisting Arizonans with their Estate Planning, Probate, and Family Law needs.
Now, let's delve into the concepts discussed in the provided article:
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Living Trust and Asset Funding:
- The article emphasizes the importance of ensuring that all assets are properly funded into a living trust. This is a critical step in making sure an estate plan works correctly when needed.
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Ownership and Beneficiary Designation:
- The author distinguishes between different financial assets, suggesting that some need to be owned by the trust, while others should name the trust as the beneficiary.
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Day-to-Day Checking and Savings Accounts:
- A specific recommendation is made to own day-to-day checking and savings accounts in the name of the trust. This is explained as a measure to prevent freezing of accounts in the event of incapacitation or death.
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Reasons for Trust Ownership:
- The article lists three significant reasons why a trust should own accounts, including avoiding freezing of accounts in case of incapacitation or death and protecting against identity theft.
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Probate Courts in Arizona:
- The author mentions that Arizona has one of the worst probate courts in the country for people who are incapacitated. It is suggested that financial accounts and real estate holdings held in an individual's name are likely to be frozen in such cases.
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Conservatorship and Legal Consequences:
- The article highlights the legal consequences of frozen accounts, such as the need to file a conservatorship lawsuit, which can be costly and cumbersome.
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Risks of Joint Ownership:
- The author cautions against the common practice of putting a family member, like a daughter, on an account for bill payment. The risks include potential legal issues such as divorce, bankruptcy, or lawsuits involving the family member.
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Authority and Access Through Trust:
- Emphasis is placed on the trust owner having the authority to write checks and pay bills while well, with the trust providing immediate access for designated individuals if the owner becomes incapacitated.
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Consultation for Trust Setup:
- The article concludes with an invitation to those interested in setting up a trust to contact the Keystone Law Firm for a consultation.
In summary, the author, Francisco Sirvent, provides valuable insights into the intricacies of estate planning, urging readers to take proactive steps to protect their assets and streamline the management of their financial affairs.
