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RayAnswers
RayAnswers, Attorney
Category: Estate Law
Satisfied Customers: 37044
Experience:  Texas lawyer for 30 years in Estate law
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We set up a family trust in 2011 with only $10 in it. I

Customer Question

We set up a family trust in 2011 with only $10 in it. I beleive the only addition to it was the insurance policy pay out. What is the point of having a trust if none of the assests are in it?
Submitted: 3 months ago.
Category: Estate Law
Expert:  RayAnswers replied 3 months ago.

Hi and welcome to JA. Ray here to help you today.

There really isn't a point here.If you can change the beneficiaries of the life insurance you draw out the $10 and you have an unfunded trust.This amounts to closing it because it doesn't serve a purpose any longer.Change the beneficiaries to the insurance and then at that point draw out the funds and that is the end of the trust.

You are correct here it makes no sense.It is possible your needs changed and its time to close it out.

Customer: replied 3 months ago.
Well I think my dad is hesitant to put his homes/ cars and other assets into the irrevocable trust but I am not sure when the time to do that is? Obviosly it would have to be done before he passes. Does it make sense to wait until one of my parents passes? I am just trying to figure out what his logic is on having a trust with nothing in it?
Expert:  RayAnswers replied 3 months ago.

Well it would protect it from creditors and medicaid.The down side is it is irrevocable.It doesn't hurt anything to leave it open here and decide whether to fund it.It is only as good as what is in it and if you want to end it assuming the insurance beneficiary can be changed you are correct it really doesn't serve a purpose.It is your call whether to terminate it by changing the beneficiary here.

Customer: replied 3 months ago.
I do not wish to terminate I am just trying to understand the point of having the trust if there is nothing in it?
Customer: replied 3 months ago.
Is the insurance policies being in there a good enough reason?
How do I know what is in the trust, besides what is listed on the original paperwork?
Expert:  RayAnswers replied 3 months ago.

Yes it would be and there's the option to add the house and cars if you want.It would protect them from medicaid here if they require it at some point.Another reason to keep it around.It may come down to whether they live long enough to use it more.You would only know by what is titled in the name of the trust, such as a house or paid for car in the name of the Bob And Sue Smith trust.I would consider recording the trust in the deed records.They are frequently lost and this protects from that problem.You can record it for say $20 or so and never have to worry about it.

Thanks for the follow up.

Thanks again.