Things to Know About Funding a Trust
At one time, trusts were only implemented by the very wealthy. Today, though, people of all asset values and income levels use trusts to ensure their assets are protected, maintain a level of privacy regarding how assets are distributed, and help loved ones avoid the probate process. Trusts have many advantages. Not only do trusts not have to go through probate, but they also give you control over how your property is divided, even after you pass away. Trusts can also help you during your lifetime in the event that you ever become incapacitated.
Still, simply creating a trust is not enough. In order for your trust to work in the way you intended, you must properly fund it. Below, one of our Kennewick trust lawyers explains more.
How to Fund a Trust
A trust is only as useful as the assets that are actually transferred into it. You can create a powerful trust but if you do not place any assets into it, you nor your family will get the full benefit of it. The process of transferring assets into your trust is known as funding the trust. You need to physically change the name on the asset from your name to the name of the trust.
For example, if you are placing your home into the trust, your trust is listed on the deed instead of your name. However, by naming yourself as trustee, you still retain total control over the property.
To fund a trust with assets that have beneficiary designations, changing ownership is not enough. You must also change the beneficiary designations. Instead of loved ones, such as children or your spouse being the beneficiary, the beneficiary is changed to the trust. After funding your trust, you can still buy and sell assets just as if you physically owned them. Generally speaking, you can also remove assets if you ever need to.
Consequences of Not Funding a Trust
When your trust was created, a ‘pour-over will’ was likely created at the same time. Creating this document means that any property not placed into your trust ‘pours over’ into your trust when you pass away. Nonetheless, pour over wills do not go into effect if you become incapacitated, meaning your property will still need to go through probate before they are placed in the trust.
How to Fund a Trust
Funding a trust is not difficult, but it does take some time. Real estate typically requires a Warranty Deed, which is filed with the county and transfers ownership of the property to the trust. If you want to fund the trust with a bank account, you need to speak with your financial institution about the appropriate paperwork to do so, but can usually be completed by providing a Certificate of Trust. It is critical to work with a trusts lawyer who can help you determine the right steps for funding your trust.
Your estate planning attorney should help you with the funding process. In our office, we have a dedicated staff member who helps clients fund their trusts to ensure the plan will work when it is needed.
Our Trust Lawyers in Kennewick Can Ensure You are Protected
Trusts are a great way to shield assets from probate and give you more control of what happens to your property. At Moulton Law Offices, P.S., our Kennewick trust lawyers can ensure yours is funded properly and will provide the protection you and your family needs. Call us now at 509-328-2150 or contact us online to request a consultation and to learn more.