What happens if you miss putting an asset into a trust?

I was able to do it easily with two, but I am having a very hard time making one understand what I want. They keep telling me that they don’t do trusts. This particular bank gives me a good rate of interest on my money, and I don’t want to change it. I have looked into other banks and have found they do not do trusts.

What are my options? Should I have a new will written? Should I take my money out of a high earning interest-bearing account and transfer it to a lower earning account? What happens when I die if I just leave everything as is and do nothing?

A: You seem to be confused about what documents have been drawn up for you, what you’re supposed to do now that you have them, and how these documents are supposed to function and protect your assets.

When you say that you had a new will done, we suspect that your attorney not only drafted a new will, but also drafted a new living trust. The living trust is designed to hold title to your home, car, stocks and other investments. When you put everything into the trust, the trust transfers assets to the beneficiaries of the trust after your death. If you miss putting an asset into the trust, the will would then kick in and take care of the distribution of that asset.

The whole point of putting assets into a living trust is so your heirs can avoid the time and expense of probating your will. A living trust does not die with you. The trust continues to exist even after your death. What changes upon your death are the trustee(s) and beneficiary or beneficiaries.

Let’s say you set up a trust and you name yourself the trustee and beneficiary. You would also typically name a successor trustee and successor beneficiary. During your lifetime, you effectively own and control the trust and everything that the trust owns. When you die, the trust’s successor trustee steps up to become the trustee. The successor beneficiary becomes the beneficiary of the trust.

If you own your home in your own name when you die, and you do not own the home as joint tenants with rights of survivorship, your heirs might have to go to probate court to have the court approve the sale or change of ownership. On the other hand, if the home is owned by your living trust, the trust continues to own the home after your death, but simply would have a new trustee and beneficiary. The change is quite simple and does not require much effort by the heirs, the replacement trustee or the new beneficiaries.

Here’s the key takeaway: Make sure that you transfer as many of your assets from your name into the name of the trust. If you’ve done that and the only asset left is this one account, you can talk to the attorney that helped you set up the trust and see what they suggest.

You might also see if the bank has the ability to set up a method to allow the funds to transfer to a designated beneficiary at your death. This is often referred to as a transfer on death deed (TOD). Setting up a TOD, which is allowed in many but not all states, may allow you to have the same end result with this one account that you’d have by putting it in a trust.

If you don’t put your assets into the trust, you won’t get the benefit of the trust and will set up. Sam has seen many instances where trusts were set up but the owners never put their assets (home, car or bank accounts) into the trust. When they die, their kids have to sort through all kinds of paperwork and hire an attorney to probate the estate to transfer the assets to the kids. That’s where it gets time-consuming and expensive.

Worse, in some cases, the trust may have provisions that may differ from the will. If you don’t put the assets into the trust, the provision of the will (or state law, if the will was not drawn up correctly) will control the disposition of those assets.

And, whatever estate planning you’ve done might go right out the window.

(Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact Ilyce and Sam through their website, bestmoneymoves.com.)