A Trust Without Assets = Very Expensive Paper

Trust without assetsOne thing that sets Cholewka Law apart from most other estate planning firms is that we automatically do trust funding as part of our trust package. What is that you ask? Let me tell you WHAT trust funding is, as well as WHY it is so important.

Creating a trust is a two-step process. I like to use the analogy of building a swimming pool.

Step #1: Creating the document itself.  This is like building the structure of the pool: rebar, pipes, filters, plaster, tile work, and the pool deck.

But can you swim in a pool without water?  Of course not!

Step #2: Re-titling your assets into the trust. This is like filling up a pool with water so that you can actually use your pool to swim.

Most attorneys build the pool for their client, but don’t fill it up with water. Instead, they give their client several pages of instructions on how to do it themselves. The problem with this approach is many clients either fail to follow through or re-title assets incorrectly.

You can’t swim in an empty pool. You can’t use an empty trust either. An empty trust does not allow you to take advantage of asset protection, avoiding probate, or incapacity planning—which are the main benefits of having a revocable trust in the first place.  An empty trust usually means at some point your family ends up in very expensive probate court.

I used to be one of those attorneys who gave my clients an instruction sheet. Sadly, I learned firsthand that my clients don’t always listen to my instructions. My very first trust client never followed through with re-titling his assets into his trust. Several months later he died in a horrific car accident—with an empty trust. It broke my heart that the plan I created for him did not work.

I’ve changed my practice since then. I believe it does not matter if I create fantastic estate planning documents for my clients. It matters that the documents I create work fantastically when my clients need them to.

Do you have meaningless, expensive paper? Or is your swimming pool full of water.

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