A trust is like an Easter basket in that it only really exists when full. Until you fill that wicker frame with chocolate eggs and other goodies, it’s nothing more than, well, a frame. Likewise, until you fund a trust with assets, it’s nothing more than legal scaffolding. Funding a trust is an essential step in the estate planning process and yet it’s easy to forget. Here’s what you need to know.
The Basics of Funding a Trust
People invest in revocable trusts (and other kinds of trusts) for numerous reasons but perhaps the most popular is wishing to avoid probate.
When you place your assets in the name of your revocable trust and stipulate how you wish them to be distributed, you allow your loved ones to inherit your life’s work directly without first needing to gain court approval. This is because trust assets are no longer legally yours and thus not subject to the same estate planning legislation.
Anything you own must go through probate court; anything your trust owns is exempt. Unfortunately, signing your trust document does not automatically transfer ownership. This only happens when you manually change titles from your name (or names) to the name of your trust. Overlook this key detail—as so many do—and all the time and resources invested in avoiding probate (or gaining other benefits from your trust) go out the window.
This comes as a surprise to many, who are accustomed to so many of their other estate planning documents coming into immediate effect upon signing. Wills work like this, after all, as do powers of attorney. Trusts are an exception.
Ensuring Your Trust is Funded
Funding a trust is a simple process that a good estate planning attorney will be happy to walk you through.
Most attorneys will take care of retitling your real estate and provide instructions on how to do the same for other assets. Each asset class is different and so it is important to take thorough stock of everything you want to end up in your trust.
If you overlook the need to transfer an asset, it’s not the end of the world. As long as you have spoken to your attorney about setting up a “pour over” will, you can rest easy.
This type of will is a sort of fallback that looks out for forgotten assets and places them in your trust upon your death. While this doesn’t avoid probate, it does ensure that your assets are distributed according to the instructions in your trust document.
To learn more about funding a trust or to address any other matter related to estate planning, do not hesitate to reach out to the Deliberato Law Center today either by calling us at (216) 341-3413 or using the contact form on our website.
Contact the Estate Planning Attorneys at Deliberato Law Center