Why Funding Your Trust is So Important

One of the most common difficulties we run into is clients who have an unfunded trust.  Many people go to an estate planning attorney because they want to avoid probate or protect their assets through a trust-based plan.  Clients who may need Medicaid benefits in the future or who want to become eligible for veterans’ benefits may be advised to execute an irrevocable trust.  Hoping to meet these goals, they go to an attorney’s office, design their estate plan, and sign their estate planning documents.  Unfortunately, and all too often, this is where many people end the estate planning process. However, an estate plan, especially a trust-based plan, is not something to be tossed casually into a dresser drawer or closet to gather dust for the next twenty years. When you execute a trust, it is vital that you also go through the process of funding the trust. If a trust is completely unfunded, it often may as well not exist.

Funding a trust refers to the process of retitling some or all of your assets into the trust so that your goals, whether they be protecting your assets or avoiding probate, can be met.  If you have a revocable trust, it is important that all of your assets that would normally pass under probate be funded into the trust.  Otherwise, your goal of avoiding probate will not be met. 

If you have an irrevocable trust, you can place as many assets as you wish into the trust in order to avoid having to spend down those assets to become eligible for Medicaid or veterans’ benefits.  Some clients place all of their assets into an irrevocable trust, while others are only comfortable with placing their home or most of their bank accounts into the trust.  Remember, if you’re considering an irrevocable trust in order to preserve your assets, it is important that you transfer all of the assets that you wish to title into the trust as soon as possible.  Medicaid currently has a five-year lookback, meaning that they will look back at all of the uncompensated transfers you made over the past five years (including those into an irrevocable trust). Depending on the amount you transfer, you may not be permitted to receive Medicaid benefits for several months. On the other hand, there is a three-year lookback in place for the VA Aid & Attendance Pension.

Depending on your financial situation and the amount and types of assets you have, funding a trust can be as simple as filling out a form with your financial institution, or it can be so complicated that you have to work with an attorney to complete the process.  The only way to make sure that you fully and properly fund the trust is to seek the advice of an experienced attorney who will be able to make recommendations as to which assets need to be retitled into your trust.  Remember – if you do not fund a trust, you might as well not have executed it at all. Only a fully funded trust will work the way you intended it to in order to protect your assets and provide for your family after you pass away.

Ask Kit Kat: America’s Parrot

Hook Law Center: Kit Kat, what can you tell us about the Carolina parakeet that is now extinct?

Kit Kat: Well, this is an interesting story. As recently as the late 1930s to early 1940s, a Carolina parakeet existed. Its face was red, its head yellow, and its wings green. Its length was in the range of 12 inches from beak to tail. Imagine encountering this exotic creature—it must have been a sight to behold! Its territory ranged from the mid-Atlantic and southern Atlantic coasts to Oklahoma. Oklahoma’s parakeets became extinct in 1913. Those along the Atlantic coast did not die out until 1938-1944, the best estimate available at this time.

So how have we learned so much about a bird which has been extinct for 80-100 years? Research has come from Spain. In 2016, Carles Lalueza-Fox, an evolutionary biologist at Pompeu Fabra University in Barcelona, was offered the opportunity to examine the remains of the bird in a private collection. Dr. Lalueza-Fox and his colleagues then set about to examine it by drilling a piece of bone in the bird’s leg to extract genetic fragments. The team was ecstatic about the condition of the bird. Similar human samples of this age often to not have viable DNA to extract. Using the sun parakeet of South America as a guide, they were able to reconstruct the Carolina  parakeet’s genome, because the two are so similar. Conclusions  reached were: the sun parakeet and Carolina parakeet split about 3 million years ago; whatever led to the extinction of the Carolina parakeet must have happened suddenly, since there is no evidence of genetic mutations or poisoning. Kevin Burgio, a researcher in New York at the Cary Institute of Ecosystem Studies in Millbrook, NY, suspects it was disease. A favorite in their diet was cockleburs. The plant is found as weeds, especially near poultry farms. He suspects a disease from the chickens may have infected them.

More research needs to be done, and there is even the possibility that the species could be revived. It’s called de-extinction. We’re a long way from that, however.  At least 500 genes would have to edited and re-created. Also, if disease was the cause of extinction, would a lot of money be spent for the same extinction process to re-occur? It’s an intriguing proposition. Stay tuned as science develops in the 21^st century! (Carl Zimmer, “Once America Had Its Own Parrot,” The New York Times, (Science section), Dec. 20, 2019)