Why Funding Your Trust Is Important and How To Do It

elderly man and woman filling paper formEstablishing a trust is an essential component of responsible estate planning. Unlike a will, which must undergo the probate process in court, a trust streamlines the distribution of your assets after your passing by bypassing this step. But just how crucial funding a trust is? To fully understand the importance and methodology of promptly funding your trust, let us examine the rationale and process in greater detail.

What Is a Trust?

The term “trust” refers to the legal document that outlines how you want your assets controlled or transferred to another individual or entity upon your death. A trust will also appoint a trustee who serves to ensure that your instructions are carried out. There are different types of trusts that can be created based on various factors. However, they all follow the same basic principles.

Why You Should Fund Your Trust

It is not uncommon for those setting up a living trust to wonder if they should fund it right away or wait. This is normally because once property is used to fund a trust, you no longer technically own it. However, by funding your trust now, you prevent the unfortunate scenario where you pass on before being able to sign over the property to the trust.

How To Fund a Trust

Generally speaking, funding a trust is fairly straightforward if using cash, securities, or personal property such as jewelry. You simply need a bank account, brokerage account, or safety deposit box. However, real estate or other property that must be passed through a deed may require the help of a San Jose, CA, trust attorney.

Personal Property

For assets that do not have formal titles or deeds, signing a general transfer document is usually all that is needed. It is good to be specific in this document. However, general categories such as “clothing” or “furniture” may be acceptable in place of itemized lists.

Financial Accounts

In the case of transferring a bank account or something similar, it is often recommended that you consult with your financial institution, as each has its own process. Typically, there are forms that must be completed and returned in order for the account(s) to be transferred to your trust.

Real Estate

Transferring real estate to your trust can be more difficult. The process itself varies slightly from state to state, while counties can dictate the format of the deed, how it is filed, and any related paperwork. There are also different types of deeds that can be used, which is why it is crucial to consult a trust attorney in San Jose, CA, for deed transfers in the area.

Business Interests

Unfortunately, there is no one-size-fits-all approach to transferring business interests to a trust. That being said, checking with business records to see if there are any specific requirements that must be met is often the first place to start.

Life Insurance

Unlike other assets, it is not necessary to transfer ownership of a life insurance policy. Instead, be sure that your beneficiaries are correctly designated. You can have all the proceeds go to your trust or your loved ones. If you choose the trust, the proceeds will be managed and distributed according to the terms of the trust.

Retirement Accounts and Plans

Retirement accounts, like life insurance policies, typically do not require a transfer of ownership. In fact, transferring ownership of a retirement account could potentially result in negative tax implications. However, similar to life insurance, you can specify whether the proceeds from your retirement account go directly to your loved ones or to your trust. It is important to note that if you choose to send the proceeds to your trust, the distribution of the funds will follow the terms of your trust.

Have a San Jose, CA, Trust Attorney Help You Fund Your Trust

To ensure that your trust is set up and funded correctly in accordance with the laws governing a living trust in California, consult an experienced team of attorneys from Keyes Law Group. We have the knowledge and experience you need to make sure that your trust is established correctly and carried out as intended. If you need help creating and funding a trust, contact a reliable San Jose, CA, trust attorney today at 408-766-7668.


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