You thought you had everything squared away. You spent months working with an estate planning attorney to create a trust, felt a wave of relief when it was finally signed, and then tucked it away safely in a secure drawer at your house. A year later, during a routine financial meeting, your advisor asked what you had put into the trust. Your face went blank. “Wait… I have to do something else?” It turns out that just creating a trust is not enough. You have to fund it—or it will not protect anything at all.
Many new trust owners mistakenly believe that the trust officially controls everything from the moment they sign the paperwork. But that could not be further from the truth. The trust cannot control anything until you transfer ownership from you to the trust. This is called “funding the trust.” Let us explore this concept in more detail with today’s blog post.
What It Means To “Fund a Trust”
As you know, having a carefully crafted revocable trust in place allows for the legal transfer of your property and assets to a trustee, who then manages the property for the trust beneficiaries. The idea is to ensure your assets are managed how you want them, whether during your lifetime, after you pass away, or both.
It is a flexible tool that can help avoid probate, protect privacy, and make passing things down much smoother.
However, the trust has to contain something for it to be of value down the road. The way you “fund” a trust is to transfer property, bank accounts, or investments that once belonged to you to the trust by titling the asset in the name of the trustee, as the trustee of your trust. For example, if you want your house in the trust, you will need to sign a new deed that conveys the ownership of the home from your name to the trustee, as Trustee of Your trust.
The same goes for bank accounts. You are essentially re-titling things. So the trust is the official owner, even though you may remain in control (if you are the trustee). This is why consulting a competent and caring estate planning attorney is wise. Once you are finished signing your trust paperwork, your attorney should walk you through a step-by-step list of instructions on how to fund your trust properly. If you have any questions about what can or cannot be included, this is the perfect time to ask.
Call Nelson Law Group Today!!
When it comes to protecting your family’s future for years down the road, it is imperative to have an estate planning attorney in your corner at all times. Give our knowledgeable staff here at Nelson Law Group, PC, a call if you have any questions. Our staff is always available.
For more information about Brett A. Nelson, click here.
