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Compassionate. Convenient. Comprehensive.

Compassionate. Convenient. Comprehensive.

Don’t Forget to Fund Your Trust

| Nov 2, 2020 | Estate Planning |

Many people choose to create trusts as part of their estate plans, and there are many benefits to using a trust, such as increased privacy and more flexibility, as well as provisions in place for family members who have special needs or who need a spendthrift protection. But one thing many people forget is rather important: funding the trust.

A trust is useful for grantors as well as trustees. During the lifetime of the grantor who created the trust, the trustee can use trust assets for the grantor’s benefit if the grantor becomes incapacitated.

However, if you want the trustee to do that, you must be sure your trust is funded.

Assets 

To fund the trust during your lifetime, you must change the title of any assets you own to the trustee. In some cases, you, as the grantor, will also be the owner of the trust. The new title would then say that the grantor owns the trust as the trustee. Assets might include real estate, bank accounts, stock and mutual fund accounts, and/or businesses. Title must be transferred prior to your need for funds, and prior to any health issues or mental decline that might make it difficult for you to authorize the transfer. In that case, your personal representative would likely have to step in and handle any remaining transfers on your behalf.

Funding At Death

Another option is funding your trust at your death by making your trust the beneficiary of certain assets, such as retirement accounts and life insurance proceeds.

When you pass, the assets in the trust are administered for the benefit of your beneficiaries, who are named in the trust. Your Will should state that your remaining assets will go into the trust. That way, you avoid your beneficiaries going through a long probate process to administer your assets.

If you have any questions about funding a trust, talk to a qualified estate attorney to find out more about how trusts work and what is needed to fund them.