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 circumstances.
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.
