13 Jul Funding A Living Trust
When it comes to creating a living trust there are many steps to the process and many things that one must consider when drawing up the document. However none of these steps are more important than the funding of the trust. The funding of the trust is the most vital and important part of the entire process of creating a living trust.
But what is funding, and what about it makes it just as important as creating to trust itself? Well consider what a trust is, it’s a document that holds title of your property to be distributed to your loved ones after you die, and specifies what you want for yourself at certain end of life decisions. But in order to distribute your belongings they must “belong” to the trust, it cannot distribute what it doesn’t own. In order to fund the trust you must transfer title and ownership of all of your assets, this included bank accounts, real estate miscellaneous things to the trust. Although it is relatively simple, transferring title of certain high value things might require that you bring the trust with you to the bank, bring your I.D. etc. it’s nothing that won’t be worth it after. The reason that funding the trust is the single most important part of the process, is that anything that is not in the trust will go through probate and could take months or years to even see again. Not only will probate extend the process of distribution it will be paid for by the estate! This means that anything that you don’t put into the trust will be put through probate after your death which will be paid for by your estate. By fully funding your trust you make sure that your wishes are carried out exactly the way you wanted them to. This is the whole purpose of a trust isn’t it? But it doesn’t matter if you spend six hundred or six thousand dollars on the trust, if it isn’t funded it isn’t going to work. Well what happens if you only forgot a few assets when funding your trust, or you came into possession of new assets after the creation of the trust? Well for these circumstances a pour over will is created and added to the trust, which basically states that everything not named by the trust will go through probate after the Trust owners death, to be put back into the trust and then divided equally amongst the beneficiaries the way the trust has it written, this is a way that one can make sure that all of their belongings are taken care of.
Trusts are a great way to secure your final wishes and safely divide your assets and belongings amongst your loved ones but just like a person, the trust can’t give out what it doesn’t own. Don’t let all the work and money you put into your estate go to waste, make sure that your trust is completely funded. This is the reason we do periodic reviews of our clients trusts, to ensure that it is funded and remains that way.
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