Preserving & Protecting Your Family’s Assets & Legacy

Trust funding is essential

by | Dec 6, 2022 | Trusts |

While there are a multitude of different trust types, they all have one thing in common:  Every trust must be “funded” with assets in order to receive the intended benefit.  Funding a trust is arguably the most important (and most neglected) step when utilizing a trust for estate planning.

A trust is a legal document giving you, another person, or an institution the power to hold and manage certain assets for your benefit, or the benefit of another person, according to the terms outlined in the document.  A trust is a separate legal entity from its maker.

Funding a trust is the process of transferring legal ownership of an asset from the previous owner to the trust.

It may be helpful to think of a newly executed trust document as an empty box.  The trust document can only control what is held inside this box.  When legal ownership of an asset is transferred into the box, the trust can then legally control the asset.  An unfunded trust is simply an empty box controlling absolutely nothing.

For bank accounts, brokerage accounts, and other investment accounts, funding consists of “change of ownership” forms to transfer the account to the trust.  For real property, a new deed must be executed transferring the property ownership to the trust.

While funding a trust is simply paperwork, it is the most crucial part of effectively using a trust for estate planning.  The paperwork can be daunting, but many elder law attorneys and financial advisors can assist clients with the necessary paperwork.


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