Pinnacle Estate Planning

By Jason Gray

PINNACLE LAW PLLC

    When establishing a trust, whether revocable or irrevocable, creating the legal document is only the first step. A crucial and often misunderstood part of the process is “funding” the trust. Funding your trust means transferring ownership of your assets into the trust, ensuring that the trustee can effectively manage and distribute assets according to your wishes.

Why Funding Your Trust Is Important

    The primary purpose of a trust is to manage and protect your assets during your lifetime and after your death, bypassing the probate process and providing privacy and ease of administration. However, if your assets are not properly transferred into the trust, they remain in your name and could be subject to probate. Probate is a public, often lengthy, and expensive legal process that can delay the distribution of your assets.

    For example, if you establish a trust but fail to transfer your home into it, that property will not be governed by the terms of the trust upon your death. Instead, it will be subject to probate, and the court will decide how the property is distributed, potentially contradicting your wishes.

How to Fund Your Trust

    Funding your trust involves re-titling assets, which means changing the ownership of those assets from your individual name to the name of the trust.

Real Estate: To transfer real estate, you must prepare a new deed that lists the trust as the owner and record it with the appropriate county office.

Financial Accounts: You need to contact your financial institutions to retitle bank accounts, brokerage accounts, and other investments into the name of the trust.

Personal Property: For valuable personal items, such as jewelry, artwork, or vehicles, you may need to draft a document stating that these items are now owned by the trust.

Life Insurance and Retirement Accounts: While these accounts are typically not retitled, you can name the trust as the beneficiary to ensure that the proceeds are managed according to your wishes.

Failing to Fund the Trust

    If you do not fund your trust, the assets you intended to protect and distribute through the trust may instead be handled through your will, subjecting them to probate. Additionally, unfunded assets might not be managed according to your specific instructions during your lifetime if you become incapacitated.

    Properly funding your trust is a vital step in estate planning. It ensures that your assets are protected, managed, and distributed according to your wishes, providing peace of mind for you and your loved ones. If you’re unsure how to fund your trust, consult with an estate planning attorney to guide you through the process.

Jason Gray is the owner of Pinnacle Estate Planning. To schedule a free consultation in Spokane, Coeur d’Alene, or Sandpoint, please call (509) 505-0665 or (208) 449-1213. You can also get more information at www.LawPinnacle.com

*This article is for informational purposes only and should not be construed as legal or financial advice.