You’ve successfully set up your living trust, and you feel as though a huge weight has been lifted from your shoulders. You feel accomplished because you’ve taken an important step toward letting your wishes be known while at the same time protecting yourself, your assets, and your family’s future. But now, your estate planning attorney is telling you it’s time to fund your trust.
What do they mean by funding your trust? Wasn’t all of that completed once you signed the trust document?
In a word — no. While you should be commended for taking ownership of your estate planning, many people wrongly assume that they are done when they sign all the legal paperwork and have a comprehensive trust document in their hands. A critical final step in creating a trust is to fund it — in other words, transfer ownership of your assets from you to the trust. Until you do, your newly-minted trust doesn’t control anything.
Today’s blog post will explain what a trust is and what it means to fund your trust.
What is a trust?
A trust is a fiduciary arrangement designed to let you decide exactly how you want your assets distributed and then transferred to your chosen beneficiaries. Unlike a will that only takes effect when you die, a trust can be created and managed during your lifetime. This is huge because it allows you to account for disability and incapacitation — not just death.
Granted, the intricacies of a trust are a bit more complicated than a will, but specificity is the biggest reason to consider one. Simply put, you can get very creative about what happens next.
A few examples include the following:
- Manage assets while you’re still alive
- Transfer property
- Name a successor trustee
- Plan for incapacitation (dementia, Alzheimer’s, stroke, injury)
- Additional privacy
- Potentially minimize estate taxes
- Protect beneficiaries from creditors and lawsuits
- Avoid Probate
- Charitable giving
With all of that said, your trust can only control the assets you put into it.
How to fund your trust
At the end of the day, everyone’s circumstances are different. It’s important to have your attorney walk you through how to fund the trust according to your unique situation. For today’s conversation, funding your trust is physically changing the titles (or ownership) of your assets from your individual or joint names to the trustee of your trust.
For example, if your current checking and savings accounts are in the name of John and Jane Doe, you would work with your bank to change the names on the accounts to the trustee’s name, as trustee for the trust. The wording needs to be very specific, so it’s best to work with your attorney throughout the process to ensure that the transfers are completed correctly.
Once the transfer is complete, the account is under the trust umbrella. You and your attorney will work together to repeat these same steps with your other assets, which may include but not be limited to:
- Real estate
- Important personal items
- Brokerage accounts
- Safe deposit boxes
You are ultimately responsible for ensuring all the appropriate assets have been transferred to your trust while you are able to do so. Completing this important step sooner rather than later means that you can take advantage of all the benefits of having a trust, which includes avoiding probate at death and court involvement if you become incapacitated.
Please call Christman Ramsey & Foster, PC, for your legal needs today!
True estate planning covers all your bases. Our attorneys will help you to create legal instruments to distribute your assets according to your wishes, nominate a guardian for minor children, minimize family disputes, avoid probate and estate administration, and plan for incapacity. Where you fall in that conversation may not be clearly defined until we can sit down, dive into your unique situation, and determine the best course for everyone involved.
Please consult an attorney for advice about your individual situation. The material on this website and in this or any blog article we publish are for informational purposes only. It does not constitute legal advice. The attorneys at Christman Ramsey & Foster, PC believe in tailoring legal advice and solutions to your own personal circumstances.
We have an unwavering commitment to helping our clients at each stage of their legal situation.