If you have had your estate plan drafted recently and that plan included a revocable trust, your job is not quite over yet. One of the most important things must then do is fund your trust. If you do not fund your trust, the trust document and all your estate planning could be useless.
There are two ways to fund your trust: 1) Transfer ownership of a particular asset out of your name individually to yourself as trustee of your trust; or 2) Make the trust the beneficiary if the asset is an account or instrument that has a beneficiary designation as an option for transferring the asset upon your death. It is a fairly simple process, but it does take time and can be forgotten about if not done right away. Remember, if you do not do this simple task, your trust will not “own” anything, and your distribution provisions in your trust won’t mean anything because your trustee won’t have anything to distribute. If, when you die, your assets aren’t in your trust, the only way for your heirs to get them distributed is to open a probate case with probate court, and that totally defeats the purpose of having a trust.
What documents should you transfer to your trust? At the very least the following can be transferred and owned by a trust:
Real Estate
Personal Property with a title (boat, airplane, car, etc)
Bank Accounts
Retirement Accounts
Investment Accounts
Annuities
Life Insurance Beneficiaries
Business Interests
The easiest way to transfer real estate to your trust is by using a Quit Claim deed. Our office can draft this for you, along with the drafting fee you will have to pay the county a recording fee. This is a very popular option.
To transfer personal property with a title, you will need to get a new title naming the trust as the owner. If your vehicle is not that valuable, it may not be worth your time to change the title to your trust. This is something we can counsel you on when we meet to discuss funding your trust.
For bank accounts, you will need to name the trust as a beneficiary. This should be an easy process and can usually be completed online depending on your bank. If you are a married couple, name each spouse as an owner on the account and then list the trust as primary beneficiary.
For any life insurance policies that you want to go to your trust, you can name the trust as the beneficiary. Contact your life insurance provider to make this change. Often life insurance companies require a paper form be completed and mailed into the company. Your insurance agent should be able to assist with this.
Transferring business interests can be more complicated depending on the entity in which you have your interest. Contact me for more information on this.
I cannot stress how important it is to fund your trust. Unfortunately, I have seen it too many trust funding failures when family members come to me with a trust and no assets were ever transferred into it. One common scenario I see is when someone creates a trust using an online program but did not follow the funding instructions properly. Please contact my office if you want to create a new estate plan or have a review your current plan.