Funding a Revocable Trust

The single biggest mistake you can make after you create your living trust is failing to fund it.

Funding essentially means transferring your assets into the trust – in other words, titling your assets and beneficiary designations in the name of your trust.

One of the main objectives of a revocable trust is to save your family the effort and expense of going through probate court to settle your estate. Be sure to fund your trust – don’t undermine its purpose!

While establishing this kind of trust is a fairly simple process, you and your heirs will only reap the benefits if you actually fund the trust by transferring your assets into it. While this might seem like a daunting task, you can keep it quite manageable by taking it one step at a time.

Before you begin to transfer assets, it’s important to understand some of the basic rules and constraints associated with revocable trusts:

• You can transfer assets to the trustee of a revocable trust either at the inception of the trust or any time after that.

• It’s imperative that the trustee own any assets you wish to keep out of probate, and that they are not in your name at the time of your death.

• You can prepare a “pour-over” Will as part of your estate plan. This document serves to automatically transfer any assets you hold in your name to the trust at the time of your death. However, know that any assets being transferred by this means are still subject to probate before they are added to the trust. The only exception is if, according to applicable state law, they are of such nature or value that they are either exempt from probate or eligible for some kind of summary probate proceeding.

What all this boils down to is that you should carefully consider and continually review which assets you keep in your name to ensure that such ownership is appropriate in light of your desire to avoid probate later on. We can help advise you on how to handle specific assets.

What Assets Should Go Into a Trust?