A trust is one of the most effective ways to protect your assets and provide for your loved ones. It allows you to set clear instructions for how your property should be managed and distributed, both during your lifetime and after you’re gone. However, creating a trust is only part of the process. For it to work as intended, it needs to hold the right assets. Without this step, your estate plan may not provide the protection you expect, leading to unnecessary delays, expenses, and complications for your beneficiaries.
Why Funding Your Trust Matters
Funding your trust is a vital step in making sure your estate plan works as intended. When assets are not properly transferred into a trust, they often remain subject to probate, a court-supervised process that can be time-consuming, costly, and stressful for your loved ones. By funding your trust, you bypass probate and ensure that your property is distributed according to your wishes.
A funded trust allows you to maintain control over how and when your beneficiaries receive their inheritance. For example, you can outline specific terms for minor children, loved ones with special needs, or individuals who may need financial guidance. This provides peace of mind that your assets will be used responsibly and in line with your goals.
Additionally, a trust that holds the intended assets can offer benefits like tax planning and creditor protection. Without funding, these advantages may be lost. Ensuring your trust is properly funded protects your family’s future and helps fulfill the purpose of your estate plan.
Common Mistakes in Trust Funding
Funding a trust requires careful attention to detail. Here are some common mistakes people make when funding their trust:
- Failing to transfer assets: A trust only controls assets that are properly titled in its name. Leaving property outside the trust means it may still go through probate.
- Overlooking key assets: Items like real estate, investment accounts, or business interests must be included in the trust. Forgetting these assets can leave them unprotected.
- Not updating beneficiary designations: Life insurance policies, retirement accounts, and other financial accounts often have beneficiary designations. If these don’t align with your trust, your estate plan may not work as intended.
- Neglecting to update the trust: Life changes, such as acquiring new property or changing family dynamics, may require you to add or modify assets in the trust.
Avoiding these mistakes ensures your trust functions as intended and your loved ones are protected.
How to Properly Transfer Assets into a Trust
Transferring assets into your trust is necessary to ensure your estate plan works effectively. Here’s how to handle various types of assets:
- Real estate: Deed your property into the trust by preparing and recording a new deed with the local registry of deeds.
- Bank accounts: Retitle your checking, savings, and money market accounts in the name of the trust.
- Investment accounts: Work with your financial advisor to retitle brokerage accounts or designate the trust as the beneficiary.
- Life insurance: Update your policy to name the trust as the beneficiary. This can help provide funds for expenses or distributions according to your trust terms.
- Personal property: Assign high-value items like jewelry, art, or collectibles to the trust through a formal assignment document.
Properly transferring assets into your trust ensures they are managed and distributed according to your wishes.
When Should You Review Your Trust Funding?
Trust funding isn’t a one-and-done task—it requires ongoing attention to stay effective. Major life events, like marriage, divorce, a new child, or buying property, often mean it’s time to update your trust funding. As your financial portfolio grows, assets such as real estate, investment accounts, or valuable personal property should be added to your trust.
Changes in laws or tax rules can also affect how your trust operates, making periodic reviews essential. It’s equally important to revisit your trust if your family dynamics or beneficiary designations change.
How We Can Help
At Surprenant & Beneski, P.C., we will guide you through every step of funding your trust, from identifying assets to retitling them in your trust. We’ll review your estate plan to ensure it reflects your current circumstances and goals, providing peace of mind that your family is protected. Whether you need assistance transferring real estate, updating beneficiary designations, or addressing unique assets, we can help you create a plan that works as intended.
Take the Next Step Today
Funding your trust is key to securing your legacy and protecting your loved ones. Contact Surprenant & Beneski, P.C. today to ensure your estate plan is complete and your future is in good hands.
