Funding a Living Trust

Living trusts have surpassed wills as the preferred method of estate planning for my clients. As a Folsomlawyer experienced in estate planning, I work with clients from all income levels, and the popularity of the living trust holds true regardless of income. Given the living trust’s immediate effect and the fact that it allows families to avoid probate, it is quite popular. After I set up the living trust, my clients will then fund the trust. This is a simple process, but quite important. 

Funding the living trust is a crucial step in ensuring that your assets are properly managed and distributed according to your wishes during your lifetime and after your passing. The process involves transferring ownership of your assets from your individual name to the name of your trust. Here’s how to fund a living trust:

1. Create the Living Trust:
   • Start by working with an attorney to create a revocable living trust. The trust document will outline your wishes for how your assets should be managed and distributed.
2. Identify Your Assets:
   • Make a comprehensive list of the assets you intend to transfer into the trust. This may include real estate, bank accounts, investment accounts, personal property, and more.
3. Review the Trust Document:
   • Carefully review the terms and provisions of your trust document to ensure it aligns with your intentions. Confirm that it grants the trustee (which may be you during your lifetime) the authority to manage the assets in the trust.
4. Re-title Assets:
   • For assets that can be retitled, such as real estate and financial accounts, change the ownership from your individual name to the name of the trust. This typically involves updating the title or account registration to include the name of the trust, e.g., “John Smith Living Trust dated X.”
5. Bank and Investment Accounts:
   • Contact your banks and financial institutions to request the necessary paperwork to transfer your accounts into the trust. You will need to provide a copy of the trust document and complete their specific forms.
6. Real Estate:
   • For real estate, you’ll need to prepare and execute a new deed that transfers ownership to the trust. This step is typically handled by the estate planning attorney. 
7. Other Assets:
   • For assets like personal property, artwork, jewelry, or vehicles, you may need to create a separate document called a “bill of sale” or an “assignment of personal property” that lists these items and indicates their transfer to the trust.
8. Update Beneficiary Designations:
   • Review and update beneficiary designations on retirement accounts, life insurance policies, and other assets that may have designated beneficiaries. Coordinate these designations with your trust.
9. Notify Financial Institutions:
   • Inform your financial institutions, insurance companies, and other relevant parties about the changes in ownership and beneficiary designations. Provide them with copies of the trust document and any required paperwork.
10. Keep Records:
    • Maintain organized records of all asset transfers, including copies of deeds, account statements, and any correspondence related to funding the trust.
11. Regularly Review and Update:
    • Periodically review your trust and its funding to ensure that it continues to align with your financial situation and intentions. Update the trust as needed when you acquire new assets or experience major life changes.

Conclusion

Funding a living trust is a crucial aspect of estate planning, as it helps ensure that the trust serves its intended purpose of managing and distributing your assets according to your wishes. Properly funded trusts can also help streamline the probate process and provide flexibility in managing your assets during your lifetime and for the benefit of your heirs. It is advisable to consult with an experienced Folsom estate planning attorney and, if necessary, a financial advisor or tax professional to ensure that the funding process is carried out correctly and efficiently. If you have any questions about funding a living trust, contact Thapar Law at 916-579-0605 or send us a message here.