Why Surplus Funds Matter—and Why Estate Planning Affects Them

After a foreclosure sale, any remaining equity—called surplus funds—may be available to the previous homeowner or their heirs. But if the homeowner has passed away, recovering those funds depends entirely on what type of estate plan (if any) they had in place.

This is where understanding the difference between a will, a trust, or no plan at all can make or break a family’s chance at recovering the money they’re entitled to.

📘 Wills vs. Trusts: What’s the Difference?

✅ Wills:

Go through probate court—a public, time-consuming process
Are contestable and can delay distribution for 12–18 months
Come with high costs—typically $10,000–$15,000 in legal fees
May complicate the process of claiming surplus funds

✅ Living Trusts:

Avoid probate, allowing immediate action by your trustee
Are private and harder to challenge
Offer control over how and when heirs receive assets
Cost around $3,000 and are flexible and amendable
Allow faster and smoother surplus fund recovery without court delays

💡 Who Needs a Trust?

Many believe that trusts are only for the wealthy—but that’s a myth. If you:

Own a home
Have a family
Want to protect your assets

…then a living trust can safeguard your estate and make life easier for your loved ones.

🛠️ How a Trust Helps With Surplus Fund Recovery

When someone dies and has a living trust, their appointed trustee can immediately start managing the estate—including claiming foreclosure surplus funds—without needing court approval.

👤 Who Does What? Key Roles in an Estate Plan:

Trustee: Manages and distributes your assets per your instructions. Can act before and after death.
Guardian: Cares for your minor children. Doesn’t need to be good with money, just great with parenting.
Executor/Personal Representative: Handles funeral planning, property sales, and works with the trustee to wrap up the estate.

These roles don’t have to be the same person, and separating them can prevent conflict and ensure every responsibility is managed well.

🔒 What Trusts Can—and Can’t—Do

https://www.yoursurplusrefund.com/contact-usLiving trusts are powerful—but they don’t do everything. Here’s what you still need:

✅ Additional Documents You Should Prepare:

Living Will / Advance Health Care Directive: This is your “pull-the-plug” document, letting others know your wishes if you’re in a vegetative state.
Power of Attorney (POA): Appoints someone to make decisions on your behalf if you’re incapacitated.
- Medical POA: Handles your healthcare decisions.
- Financial POA: Manages your finances before death.

Example: One of the speakers shared how their mother had Alzheimer’s, and the trust allowed them to manage her affairs for years before she passed—proving the trust activates before death, not just after.

❌ What Trusts Don’t Do:

They don’t provide asset protection. A living trust is about legacy and smooth transfer—not shielding you from lawsuits.
They don’t fund themselves. You must transfer ownership of your assets (homes, LLCs, bank accounts) to the trust—this is called funding the trust.

🔄 Review and Maintain Your Trust

A trust is not a one-and-done document. Review it:

Annually
After major life events (marriage, divorce, new children)
When you acquire new assets

💬 Final Thoughts: Trusts Make Surplus Claims Easier

When a loved one passes without a trust:

Probate drags on
Claims get contested
Surplus funds may be lost entirely

But with a trust:

A trustee can act immediately
The family avoids court battles
Surplus funds can be recovered faster and with fewer costs

“Leave a legacy—not a disaster.”

📞 Need Help With a Surplus Claim?

Surplus Refund LLC can help you navigate this process—even if a will or trust wasn’t in place.

But if you’re planning ahead or helping someone get their estate documents in order, let us connect you with the right legal experts.

Don’t wait—take action today. If you fail to plan, that is the plan your family inherits.