You set up a trust to transfer your assets on to your children when you pass away. You put some of your assets into the trust at the time. However, you do not pass away for another 10 years. In that time, you gain more assets that you forget to add to the trust. You never update it. Now, what happens to those assets?
Typically, the assets then have to go through probate. They’ll still pass on to your heirs, but they may lose some money in taxes, and it can take time. It all depends on the specifics of your estate. But do not assume that all assets end up in your trust. No matter what you intended, the courts don’t take this step for you. It’s up to you to do it in advance.
There are some exceptions. For instance, maybe you bought a life insurance policy. You forgot to have it pay out into the trust. Instead, you linked a beneficiary directly to the account. If you pass away, the policy then pays out to that person. It skips the probate process and also skips the trust.
This can create some issues, especially if you assumed that the trust contained all of your assets and made no other plans. It can lead to confusion for your heirs. This is why it’s so important to update your estate plan after every significant change.
If this is something you need to focus on a bit more in the future to avoid the outcome depicted above, be sure you know what legal steps to take.