Trust funding is a topic we focus on quite a bit at Atlanta Wills & Trusts because, frankly, we think it is THE most important part of a trust based estate plan. Because we think this, we felt that we should share some resources with everyone on this topic, starting with what the heck trust funding means!
Trust funding is simply the act of putting property INTO your trust or ensuring that at your death your property goes INTO your trust.
What property are we talking about? Money, personal property, and real property. So your bank accounts, stock accounts, life insurance, retirement accounts (put a pin in this one for a later post) and other kinds of money. The personal property is your stuff, your things (including your pets, by the way). The real property is your home. And for a lot folks, that is a pretty large investment and asset to protect.
The goal is to have a fully funded trust at all times. We help our clients, in the immediate weeks after they sign their trust, fund it properly and completely. That is one of our goals and commitments.
Having a fully funded trust is important (more on this in another post, also) because the entire purpose behind a trust is likely one of a few things: avoid probate, make it easier for your family at your passing, protect your property for a loved one (a child, especially if they are under 18 years old) or to ensure expectations are clear on what you want to have happen after you pass away. Those are the reasons that our clients primarily focus on trust planning.
We plan on sharing some specifics on how we help clients fund their property, but generally the how is like this:
- Change ownership of the property. So go to the bank and change the owner of an account to the Trustees (even if that is you) of your trust rather than you personally. Or file a deed to change the ownership of real estate to the Trustees of your trust (even if that is you) rather than it be in your name personally.
- Update your beneficiary designations to go to YOUR TRUST and not a person or persons. Especially if those persons are under 18 years old.
There are a lot of considerations to think of when doing this for every account, every home, every designation. There are sometimes moments where you need to stop and talk to an accountant or a financial advisor, if you have one. There are times where we speak with our clients on potential alternatives ways of funding or designating that may make more sense for their family and goals. Funding is not a one size fits all task. Which is why we help our clients do it! And do it completely.
This brings us back to the fact that when you create a living trust estate plan, trust funding is literally the most important step in that process. Make sure your trust is fully funded!