Funding Your Trust

By Jenny Ling, Esq.

Trusts used to be only be implemented by the very wealthy, but they are now being used by people of all income levels and asset values to help protect their assets, maintain privacy of asset distribution, and keep their loved ones out of the court process.  There are many advantages to a Trust.  A Trust provides extra protections for your assets and for your family.  Assets that are in the Trust will be able to avoid the probate process, while giving you control over how your assets are distributed, even after you die.  A Trust also can also assist in the case of your possible incapacity.

However, your Trust is only as useful as the assets you actually place in the Trust.  You can create a great Trust, but if you don’t place any assets in the Trust, you are not getting the full benefit of your Trust. Funding your Trust is the process of transferring your assets from you to your Trust.  You will need to physically change the name on the asset from your name to the name of your Trust.  For example, you will no longer be the owner of the in which house you live.  Your Trust will be listed on the deed.  However, since you are likely the Trustee for the Trust, you will retain complete control over your home. 

Funding your Trust also includes changing the beneficiary designations for many assets to your Trust, instead of individuals, like your spouse or children.  Once you have funded your Trust, you will still buy and sell assets just as you do now.  You can also generally remove assets from the Trust if you ever decide to do so.

What happens if you don’t fund your Trust?

When you created your Trust, you likely also signed a “pour-over” Will.  Under that document, any assets that are not in your Trust will “pour-over” to your Trust when you die.  However, your pour-over Will will not be in effect if you become incapacitated and your assets will likely still need to go through probate before being placed in your Trust.

What assets go into my Trust?  How do I get them there?

Funding your Trust is not a difficult process, but it may take some time.  If you have completed your estate planning with us, please refer to your Inventory that we created for you for specifics regarding your estate. Here are some general guidelines for some assets.

Note that these are general guidelines and each person should consult their attorney regarding the specifics of their estate.

Real Estate.  If we helped you create your Trust, you likely signed a Quit Claim Deed for your home and we filed that deed with the county.  The Quit Claim Deed transfers ownership of your home from you to your Trust.  Real Estate Excise Taxes are generally not due on this type of transfer, however most counties still require you to file a REETA and pay a small fee for the pleasure of confirming you do not pay taxes.

Bank and savings accounts.  You should contact your bank for the proper paperwork to transfer these assets.

Investments (stocks, bonds, brokerage accounts).  Contact your broker or financial advisor to give you the proper paperwork to complete.

Important Reminders

When you refinance your home, in our experience, most lenders will allow you to refinance your home with the Trust on title.  If not, your bank may instead require you to complete the refinance in your own name and then transfer your home back into your Trust.

Should you transfer your car, boat or motorhome into your Trust?  Although these are assets with financial value, it may make more sense to keep these assets outside your Trust. 

Remember to fund your Trust!

Our concern for you and your family does not end at your signing appointment.  We want to make sure that the plan we spent creating together works for you and protects what is most important to you.  Be sure to notify us when you transfer an asset into or out of your Trust so we can update our records.

If you are feeling overwhelmed by the prospect of transferring your assets on your own, or just think that you aren’t going to get to it, please give us a call.  We’d love to help you!

Jenny Ling is a partner at the Law Offices of Jenny Ling, PLLC.  She focuses her practices on estate planning, business succession planning, business and bankruptcy.