If you have created a Trust the next important step is to “fund” your trust. Funding is simply the process of transferring your assets into your trust. However, missing this important step can take your assets straight into probate court upon your passing. Let’s dive in to better understand what funding your trust entails:
What is “funding” my trust?
Funding your trust is the process of transferring your assets from you to your trust. To do this, you physically change the titles of your assets from your individual name (or joint names, if married) to the name of your trust. You will also change most beneficiary designations to your trust.
Say you create your trust with the intention to transfer your house and other property into that trust. If you pass away prior to transferring your house, then the house will not become part of your trust. Your family then would need to go through a court supervised process called probate to transfer that house into your trust. This is a time consuming, costly, and unnecessary process that could have been avoided if the property was transferred during your lifetime.
How does trust funding work?
How funding works depends on what assets the owner of the trust wants to transfer. With assets that have a legal title or deed – such as real estate and certain types of financial accounts – the owner transfers from his/her name into the name of the trust. Transferring financial accounts may require the grantor to provide the financial institution with proof that the trust exists. Because it’s so common to use trusts in this way, financial institutions generally have clear processes that clients funding trusts can follow. Untitled assets, like furniture and personal items, may be transferred to the trust by creating assignment forms.
Won’t my attorney do this?
Typically, you will transfer some assets and your attorney will handle some. Most attorneys will transfer your real estate, then provide you with instructions and sample letters for your other assets. However, a lot of times, client’s will acquire new property during their lifetime and forget to follow the instructions provided to them – landing their families in probate court after their passing.
Contact our office at Duisters & Parvizi, APC if you have any questions regarding funding your trust or your estate plan.
