Trust Funding: Setting Your Trustee Up for Success

A revocable living trust is an important tool for many individuals to manage their finances during times of incapacity and provide financial security for their loved ones after their death. Nonetheless, the estate planning process is not complete simply by signing the trust agreement; the trust must be funded to function effectively.

What Is Trust Funding?

Trust funding is the process of transferring the ownership of accounts and property to the trust during your lifetime or designating the trust as a beneficiary of an account or piece of property so that the trust will receive ownership upon your passing.

Trust Funding as a First Step for Trust Administration

A completely funded trust not only avoids the dreaded probate process but it can also make the trust administration process much easier.

Accessing your accounts and property will be less complicated. If you have properly funded your trust, your successor trustee should have little or no trouble stepping in to manage the accounts and property if you are unable to do so. This can be incredibly important if you are incapacitated and action must be taken right away. Your successor trustee may need to provide third parties with documentation proving their authority to act on behalf of the trust, but we can easily prepare this documentation for you without court involvement.

Creating the inventory for your trustee. A comprehensive inventory of all the trust's accounts and property is one of the first things your successor trustee must provide your named beneficiaries at your passing. If the information gathered during the funding process is kept up to date, you will leave behind a helpful preliminary list for your trustee to use. This can save the successor trustee a lot of time in the beginning stages of administration.

Confidence that your plan will be carried out. If an account or piece of property is not owned by the trust, the instructions in the trust agreement will not matter. If the item is not controlled by a beneficiary designation or joint ownership, it will go through the probate process. At best, the property will be funded into the trust through a pour-over will. At worst, the court, relying on state statute setting forth a default method for dividing your money and property among specified heirs, will distribute the account or property to a family member you would have otherwise wanted to disinherit. If a beneficiary has been named on an account or piece of property, it does not matter what your trust agreement says, it will go to whomever is listed on the beneficiary designation. The same is true with joint tenancy. Joint tenancy means that the other owner will automatically receive 100% of the interest in the account or property upon your death.

Working Together Now for Future Success

You obviously care deeply for your loved ones. Otherwise, you would not have taken the time to create an estate plan. The last step you need to take is to fund the trust. Please give us a call if you have any questions about the process. We are available via email, telephone call, or video conference, if you prefer, to assist you in any way you may need. We are also available to do the trust funding for you if you would like. Let us work together to make sure that your hard work will set up you and your loved ones for a successful future.

 "Live with Your Bags Packed!"®

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The information in this blog is for educational purposes only and should not be considered legal advice.