Someone asked how they should fund their irrevocable trust. I have the following answer.
Are you mixing metaphors? Your question is related to funding an irrevocable trust. In Washington state, and others, all trusts are revocable. And, in death, revocable trusts are irrevocable. As such, I have always had trouble with the phrase "irrevocable trust." It is misleading.
A better way to look at it is whether a trust is testamentary or living. A living trust is a trust that is effective when the trust maker is living. A testamentary trust is a trust created when the trust maker is dead. A testamentary trust can be created by a Will. Likely, you are referring to this type of trust in the form of a Spousal Protection Trust. (I hope so because a Spousal Protection Trust protects your spouse's inheritance against ALL creditors and that includes Medicaid spend-downs, liens, penalties, look-back periods, etc. No trust does that. Worst, a revocable trust not only does nothing, it disqualifies its assets from EVER being protected from Medicaid spend-downs. This is the ONE message I have for all couples who think they are protected because they have a crappy little living trust).
Spousal Protection Trusts are lovely. They correctly account for settlement of the deceased spouse's assets when he or she dies. The method of settling the estate is a probate. Now, people whine about probates because they confuse this court process with estate tax. Two different things. What is cool about probate is that it provides a framework for not only peace of mind to heirs, permanently barring creditors, but cutting through bank-related baloney about accounts. Nothing shuts Bank of America up faster than an Order Appointing your son or daughter as THE new sheriff of your bank accounts.
The other cool thing about this "wait and see" approach is that you get to wait .... I was going to say "see" but you will be dead when this happens so... let me start again. Your future family leader, a child who has been given the job of Personal Representative, get to survey your assets and see what you still have and THEN transfer them into the trust IF the trust exists in your Will.
This is helpful because God cares about you and your wealth. The Law does not. Rather, only the assets you owned when you died are relevant. Sadly, many people suffer estate erosion as they age due to long-term care costs and the list of assets now often, for them, varies from what they have at the finish line. This is far more true for the knuckleheads... I mean, 70% of hard working Americans who arrogantly refused to build or update a legal plan.
If you are trying to create a list of assets to include financial accounts and real estate so your estate does not end up as a small contribution to the $70 BILLION dollar mass of forgotten wealth in unclaimed property piles hoarded by state governments, then, by all means, make a list. You can describe the assets anyway you would like. Real estate transfers only by deed. This means you can either write down the legal description and parcel number now or make your kid do it later.
TIP: Every 12-18 months your smoke detector battery will begin to chirp, signaling the time to replace it. When you hear it go, look at it as a time also to review your list of assets and update them. How often do revocable living trusts blow up because a trust maker bought a snow bird condo in Arizona and didn't transfer it into the trust i can't even begin to imagine.
