You’ve made a wise decision to set up a living trust. After careful thought, you’ve worked with your attorney to outline how you want your assets managed and distributed, and you’ve signed the paperwork. That’s a major milestone in safeguarding your family’s future. But there’s one essential step left—funding your trust.
What Does It Mean to Fund a Trust?
Funding a trust simply means transferring ownership of your assets into the name of the trust. This can include bank accounts, real estate, investment accounts, and even personal property. When these assets are retitled to the trust, they’re officially part of it, and your trustee can manage them according to the instructions you’ve laid out.
Without funding, your trust can’t do its job. Those carefully drafted terms won’t apply to any asset left outside the trust’s ownership. And that can lead to complications you were hoping to avoid.
Why Funding Your Trust Matters
Think of your trust as an empty container. No matter how sturdy or well-designed it is, it can’t protect what’s not inside it. Assets left outside the trust remain in your name, and when you pass away, they will have to go through probate—even if you have a “pour-over” will.
A pour-over will is a safety net, transferring any unfunded assets into your trust after your death. However, these assets must first go through probate, which can be time-consuming and costly. The very benefits of a trust—avoiding probate, maintaining privacy, and ensuring seamless management—are lost when assets aren’t funded into it during your lifetime.
The Funding Process: What’s Involved?
Funding your trust involves a series of administrative steps that vary depending on the types of assets you own:
- Bank and Investment Accounts: You’ll need to retitle accounts into the name of the trust or list the trust as the pay-on-death beneficiary.
- Real Estate: A new deed must be prepared to transfer ownership to the trust.
- Personal Property: Certain valuable items, such as collectibles or vehicles, can also be transferred into the trust.
- Life Insurance and Retirement Accounts: While these accounts are not directly owned by the trust, you may choose to name the trust as a beneficiary to align with your overall estate plan.
Each step requires coordination and attention to detail, but the payoff is peace of mind for you and your loved ones.
Common Reasons People Delay Funding
Some people create a trust but put off funding it. Why? The process can feel overwhelming, especially if you have multiple accounts, properties, or other assets to transfer. Others mistakenly believe that a pour-over will is enough or think they’ll handle it later.
However, delays can be costly. If something unexpected happens before your trust is fully funded, your estate plan won’t work as intended. For example, any out-of-state property left outside the trust will require separate probate proceedings in that state. This can be a time-consuming and expensive process that your family must navigate while grieving.
Avoiding Family Disputes and Probate
A funded trust also provides an added layer of protection in families with complex dynamics. If there’s a risk of conflict among heirs or if you’re in a second marriage with blended family concerns, a trust ensures that your wishes are carried out. Trusts are private documents, unlike wills, which become public during probate. This privacy can help reduce disputes and maintain harmony.
Taking the Next Step
Creating a trust was an important first step, but funding it is the key to ensuring your estate plan works seamlessly. Don’t leave this step for later—your family’s future depends on it.
Need Help Now?
Learning is always a good thing, but eventually, it is time to take action. If you’ve reached that point, we’re here to guide you through the process of funding your trust.
When you work with us, we’ll take the time to understand your unique situation and provide personalized recommendations. From retitling assets to updating beneficiary designations, we’ll ensure your trust is fully funded and ready to fulfill your goals.
Once your trust is funded, you can move forward with confidence knowing that your estate plan is complete and your family is protected. If things change in the future, we’re always available to help you make updates.
Call us today to learn more information about how we can help you. You can reach us at 860-548-1000 or use the contact form on this site to get started. Let us help you make the most of your estate planning efforts.
