“Funding a trust” refers to the process of placing assets into a trust. It is a critical step and, if left undone, can undermine your entire estate plan.
Trusts are popular and useful estate planning tools because they are an effective way to avoid probate, provide for asset management, and achieve many other goals, including tax, long-term care, and asset protection planning. However, you can’t take advantage of what a trust has to offer if you don’t properly fund your trust.
Knowing which assets to fund requires an understanding of the type of trust as well as your estate planning goals. Your attorney can help guide you in creating a trust funding plan. Once the plan is in place, the process for transferring the asset will vary by type of asset transferred. For instance, real estate is transferred by deed, wherein the transfer of cash assets typically involves opening an account in the name of the trust at your financial institution. Ask your attorney if you are unsure how to transfer.
Once your initial funding is complete, it is important to review your trust periodically. This will ensure that any newly acquired assets are reviewed and funded appropriately.