Making your trust work by funding

Setting up a trust is important, but the effort put into setting it up will go to waste if it remains unfunded.

The big picture: Trusts are not funded inherently when they are set up – assets need to be transferred into them in order for them to be effective.

  • A type of will called a “pourover will” serves to transfers your assets into your trust when you die.
  • Pourover wills do not take effect until after your estate has gone through the probate process, and they are designed to transfer any small assets you may have left outside of your trust before death.
  • A properly funded trust can avoid the probate process by not leaving any assets out to be covered by the pourover will upon death.

What to do: Transfer your assets into your trust after setting it up, as soon as you are able.

  • Financial accounts such as checking, brokerage, savings, and money market accounts can be transferred or retitled with the assistance of the bank governing them.
  • Real property can be transferred via quit claim deed, though whether that quit claim deed is recorded right away is dependent on individual factors.
  • Business interests, such as stock or ownership interests, can be transferred as well, though they typically require the consent of an executive, differing depending on the corporate structure.

Keep in mind: Some assets cannot be or should not be transferred into a trust.

  • Motor vehicles are best handled via wills, and should not be retitled to a trust before death.
  • Contractual rights are typically barred from these sorts of transferals, or do not necessarily need to be transferred for them to be protected.
Michael Faehner

Michael J. Faehner

Michael J. Faehner is the founder of Faehner PLLC in Oldsmar, Florida. Michael focuses his practice on estate planning, corporate,…

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