how to fund a living trust

2021-09-05

What Does it Mean to Fund a Living Trust?

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Have you recently created a living trust? That’s fantastic! Trusts are wonderful tools for protecting estate assets like bank accounts, money market accounts, properties, businesses, cars, boats, and more. Another big benefit of living trusts is that they keep your estate out of probate court. However, a trust won’t work unless it has been funded. Today we’ll cover how to fund a living trust so you’re prepared to fully utilize your new estate planning tool. 

How to Fund a Living Trust

The process of funding your trust is not quick and snappy. It will take some time and consideration. However, if you don’t do the work and fund your trust, it will not serve you when the time comes. It will just be a pile of papers with no legal authority or ability to protect your assets. 

Here are the four steps you need to follow to fund your trust:

        1. Choose the assets to place in your trust
        2. Figure out what doesn’t belong in your trust
        3. Transfer the titles to the trust
        4. Change the designations of all assets to name the living trust as the beneficiary

 

Example of Funding a Trust in Scottsdale, AZ

 

Take Iris, for example. Iris wants to create a concrete estate plan that will fulfill several goals. She wants to avoid probate court, make charitable contributions, set up trust funds for her grandchildren, and leave her house to her great-niece. Iris also has several valuable items she wants to transfer seamlessly to her chosen beneficiaries. To accomplish all this, Iris can simply create a living trust and fund that trust with the proper titles. 

Iris chooses the following assets to fund her trust: 

      • The totals of two bank accounts, to be left for her children and her church 
      • Her current residence left for her great-niece
      • Her collection of firearms left for her son
      • Two vehicles left to her daughters
      • Jewelry and designer handbags left to her granddaughters

Although Iris has other assets, she decides not to place them in a living trust. These are items like her 401K, IRA, and her life insurance policies. This is because not all assets belong in a living trust. For tax purposes, it’s best to leave certain assets out of your trust.

Do You Need Help Preparing a Living Trust in Scottsdale? 

Setting up a living trust may be a complex process, but our experts can walk you through the entire process and make it seem like a breeze. We have established living trusts for many families in the Phoenix Valley. We want to make estate planning easy on you, and we want to make sure you have all your bases covered. If you have questions about how to fund a living trust, give Phelps LaClair a call today!

 

 

 

 

 

 

photo by S K from Pixabay.com on 9/5/2021 | used under the creative commons license | no edits made

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