Book a consultation
email us icon QUESTIONS?
Send us a message
call us icon CALL US TOLL-FREE:
three puzzle pieces with names Fully funding, will substitute, and FDIC protection

3 things you need to know about estate planning with a living trust

by Legacy Plan
August 31, 2017

Estate planning contains many options. One of these is the revocable living trust. While many people know that a living trust can help your family avoid the costs, hassles and time delays that may be associated with probate administration, there are many other facts about, and benefits of, living trusts that are less well-known, such the benefits your trust can provide you during your lifetime and the added level of FDIC protection that trust ownership of bank accounts may offer. These are just a few of the many useful pieces of information regarding what a living trust can do for you. A qualified estate planning attorney can give you specific information that is custom-tailored to your situation.

If you've developed much familiarity with estate planning, there are probably certain things you know already. For example, a properly funded living trust can help you avoid probate and powers of attorney can provide valuable benefits if you become mentally incapacitated. However, there are certain other things that are true about estate planning and are less well-known, but are still really useful to have in your “knowledge base.” Here are three of them:

  1. “Fully funding” your living trust doesn't mean funding EVERYTHING into your trust.

    You may have heard that, for your living trust to best do its job in helping you avoid probate, it has to be “fully” funded. Don't misinterpret to mean that all of your assets go into your trust. There are certain things that can stay outside the trust, and some that absolutely SHOULD be owned by you, not your trust. Anything that has a death beneficiary designation on it (such as pay-on-death accounts or transfer-on-death-deeded property) can stay out. You should NOT fund your IRA, 401(k) or qualified annuities. Funding them into your trust constitutes what the IRS calls a “complete withdrawal” and that can trigger some very harmful tax consequences for you.

  2. A living trust isn't actually a “will substitute.”

    Many people call living trusts will substitutes. They do this because living trusts can accomplish many of the same objectives as a basic will. The big thing is, of course, that each can distribute your assets to your desired beneficiaries upon your death and each one can designate whom you want to oversee that distribution process. But calling a living trust a “will substitute” is a bit inaccurate. Only a living trust can help you while you're still alive (which it can do by potentially helping you avoid the costs and stresses of a guardianship/conservatorship proceeding in court.) Only a will can do certain other things, like naming the person you'd like to act as the guardian for your minor children. Each of the two documents has unique abilities, which is why an estate with a living trust includes both a trust (or trusts) and a will.

  3. Your trust-owned bank account may qualify for greater protection from the FDIC.

    While the frequency of bank failures is less common than, say, in the 1930s, they do still happen, which is why the federal government insures bank deposits through the FDIC. An individual account generally qualified for protection up to $250,000. But a trust-owned bank account generally qualified for $250,000 per beneficiary. So, if you fund your bank account into your trust and your trust says that your asset transfer, upon your death, to your 4 surviving children and 2 of your grandkids, then that account could qualify for $1.5 million in FDIC protection.

This is, undoubtedly, not a complete list of lesser-known truths about living trusts, wills and estate planning. The facts about estate planning can fill (and have filled) entire books. That's why it is important to work with a qualified estate planning attorney, who can learn about your specific, individual needs and then apply all of his/her legal knowledge to help you get the plan that best works for you.

How do I create an estate plan?

There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Membership with Legacy Assurance Plan provides members with valuable resources and guidance to develop comprehensive estate plans that take life's contingencies into consideration and leave a positive impact for generations to come. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come through periodic reviews.

This article is published by Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at

Phone - 844.445.3422
Email -
25 common estate planning mistakes booklet

Don't make estate planning mistakes. Avoid common mistakes with our free guide,
"25 Common Estate Planning Mistakes"

Legacy Assurance Plan Shield Logo
Subscribe to Our Monthly Newsletter!

We won't share your email, and we make it easy to unsubscribe!