Funding Your Trust
One of the fundamental concepts of a trust is control; control over how the trust assets are used and for what purpose. But no control can be exercised unless assets are transferred to the trust in the first place; this process is called “funding” your trust. Without funding, your trust will exist, but have no function or purpose until it receives assets. This blog will cover a few types of assets and the means by which they might be conveyed to your trust: real estate, financial accounts, and life insurance or qualified retirement accounts.
Real estate is easily conveyed into a trust if you understand the rules that apply to all real property transactions. You will use a deed to convey the property from yourself (or the seller) to your trust; that deed must contain the title for the property (name and date of the trust) along with the legal description of the property. The deed is then signed, notarized and recorded in the county where the property is located. Many counties will also require a statement as to the value of the property at the time of transfer or a statement exempting the transfer to your trust from such requirement.
Separate from the deed, you may also be required to record a certificate of trust along with the deed. The trust certificate is an abbreviated summary of the trust that lists out the names, powers and duties of the trustee and successor trustees. This document gives evidence of the trustee’s authority over the trust assets.
Your personal checking, savings, and investment accounts can easily be transferred to your trust but each financial institution is going to have their proprietary forms to complete. You will likely need to provide that same certificate of trust for the bank to copy so that they know whether someone claiming to be your successor trustee years from now really has that authority. Your attorney should have included sample letters with your trust to request the forms from your bank to change the title on the accounts to the trust. These letters will also include the preferred manner in which the trust name should be written on the account title so that there is no guesswork.
Lastly, you can name your trust as the beneficiary of life insurance policies or qualified retirement accounts. This change is accomplished by requesting beneficiary designation change forms from your insurance company or account custodian and submitting the forms to change the designation on your accounts. You should consult your estate planning counsel as to whether you should name your trust as a beneficiary of such accounts.
Ideally, your attorney will help you to transfer your assets, such as real estate, into the trust and provide you with sample letters for you to use for other assets. But sometimes there is a communication breakdown where you might not remember a particular asset or inform your attorney of its ownership. A pour-over will is used to capture assets your may have forgotten to transfer during your lifetime.
If you have any questions about funding a trust or other estate planning matters, contact a seasoned estate planning attorney at Nielsen Law Group for help. You can schedule your initial consultation by calling (480) 888-7111 or submitting a web request here.