Funding your trust involves transferring property and assets into the trust. The process depends on the type of property and assets you have. When it comes to retitling your assets for your trust, you need to review all your assets and accounts and determine which ones need to be transferred to your trust and which ones require the proper beneficiary destinations. For your personal property, like jewelry and such, you can transfer these by assigning an ownership document. Property with a title, like your car, can be retitled into the name of the trust and through an assignment. Your monetary assets like investment accounts and life insurance should be changed to the name of the trust so that those assets are transferred properly there when the time comes for them to be disbursed. You should pay special attention to your life insurance as you don’t want to make your estate’s assets become subject to the estate taxes – up to 40% in 2021! When it comes to your home and rental properties, you’ll want to retitle into the trust’s name using a quit claim deed.
What Happens If You Don’t Fund Your Trust?
After you pass away, if your estate plan is unfunded, then your executor or trustees may not be able to manage your assets. This means that your estate may end up going through the probate process, which takes time, money, and may have unexpected taxes that you had originally planned to avoid. Also your assets may not go to your intended beneficiaries as the decision is then made by your state. If something is not titled properly, it remains outside of the control of your estate plan. The purpose of a trust is to avoid the probate process altogether. It’s also important to consider if you were to become incapacitated without a funded estate plan, then your healthcare decisions may be in the hands of a court-appointed trustee, or someone that you don’t wish to be making those decisions for either your well-being or your financial affairs.
How Do You Start Funding Your Trust?
A great way to start the process of funding your trust is to create a Wealth Inventory. A Wealth Inventory is a list of your assets and all the necessary information one may need if they were managing your assets. Here are some items to include if you need to start a Wealth Inventory:
- Name of the account
- Account number
- How the account is currently titled
- Name of how the account should be titled or transferred
- Approximate value of the account
- Any notes one would need to know about the account
- Funding – note when the asset was retitled and that the validation documents were received
Then, you can use the Wealth Inventory as the roadmap for your funding process.
We Are Here to Help
You spend a lot of time and money creating the right estate plan, so don’t make the mistake of forgetting to fund your trust. We know this process is time consuming and tedious and we do our best to help our clients through the process with the right information. The process doesn’t have to be complicated as the work is mostly contacting your financial institutions to make the changes, and it’s so important to make sure everything you’ve worked for is taken care of the right way. Once you’ve funded your plan, you can rest assured that your wishes will be honored and your family will be taken care of. Let us know what questions you have and how we can help you.