After you work with your estate planning attorney to draft a carefully tailored estate plan, it is usually your responsibility to “fund” the trust.
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What does funding the trust mean?
Funding the trust is simply transferring assets into your trust.
If you have a trust, you will want to put your assets into the trust, by retitling bank accounts, re-designating beneficiaries of life insurance, etc. We walk our clients through the process, but we usually recommend that the clients make the transfers themselves.
If clients fail to make the transfers or fail to title them correctly, the assets will not be a part of the trust.
This means that the assets outside of the trust will still need to go through probate court. Any assets in your name alone will require probate administration.
Probate administration is costly and can be time consuming. Avoiding probate is one of the main reasons people love using trusts. To fail to fund your trust is unfortunate, in that you will have taken the time to draft your trust, paid for your trust, and then your assets will still have to incur the costs of probate.
Further, if the assets are not in your trust, they will not follow your wishes that you set out in the trust.
If you are overwhelmed by funding your trust, work with your attorney.
We help our clients understand the funding process and know exactly what they need to do to complete the funding. However, if our clients do not wish to fund their own trusts, we offer funding services.
It is essential to know that your trust is a living document that requires care during your life to get the full benefits of your trust. You need to ensure it is updated to reflect your wishes and assets, and that it is fully funded.
Once you have gone through the process of funding it initially, additional assets are easy to transfer in as you will know what to do and will only need to perform transfers as your assets increase.
Let us know if you have questions about your estate plan or funding your trust.
Contact us today to help you get the right documents in place or to update your current estate plan. We will plan so that you don’t have to worry about your future.
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